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LEGAL ETHICS CASES REPORT G.R. No. L-35702 May 29, 1973 DOMINGO D. RUBIAS, plaintiff-appellant, vs.

ISAIAS BATILLER, defendant-appellee. Gregorio M. Rubias for plaintiff-appellant. Vicente R. Acsay for defendant-appellee. TEEHANKEE, J.: In this appeal certified by the Court of Appeals to this Court as involving purely legal questions, we affirm the dismissal order rendered by the Iloilo court of first instance after pre-trial and submittal of the pertinent documentary exhibits. Such dismissal was proper, plaintiff having no cause of action, since it was duly established in the record that the application for registration of the land in question filed by Francisco Militante, plaintiff's vendor and predecessor interest, had been dismissed by decision of 1952 of the land registration court as affirmed by final judgment in 1958 of the Court of Appeals and hence, there was no title or right to the land that could be transmitted by the purported sale to plaintiff. As late as 1964, the Iloilo court of first instance had in another case of ejectment likewise upheld by final judgment defendant's "better right to possess the land in question . having been in the actual possession thereof under a claim of title many years before Francisco Militante sold the land to the plaintiff." Furthermore, even assuming that Militante had anything to sell, the deed of sale executed in 1956 by him in favor of plaintiff at a time when plaintiff was concededly his counsel of record in the land registration case involving the very land in dispute (ultimately decided adversely against Militante by the Court of Appeals' 1958 judgment affirming the lower court's dismissal of Militante's application for registration) was properly declared inexistent and void by the lower court, as decreed by Article 1409 in relation to Article 1491 of the Civil Code. The appellate court, in its resolution of certification of 25 July 1972, gave the following backgrounder of the appeal at bar: On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit to recover the ownership and possession of certain portions of lot under Psu99791 located in Barrio General Luna, Barotac Viejo, Iloilo which he bought from his father-in-law, Francisco Militante in 1956 against its present occupant defendant, Isaias Batiller, who illegally entered said

portions of the lot on two occasions in 1945 and in 1959. Plaintiff prayed also for damages and attorneys fees. (pp. 1-7, Record on Appeal). In his answer with counter-claim defendant claims the complaint of the plaintiff does not state a cause of action, the truth of the matter being that he and his predecessors-in-interest have always been in actual, open and continuous possession since time immemorial under claim of ownership of the portions of the lot in question and for the alleged malicious institution of the complaint he claims he has suffered moral damages in the amount of P 2,000.00, as well as the sum of P500.00 for attorney's fees. ... On December 9, 1964, the trial court issued a pre-trial order, after a pre-trial conference between the parties and their counsel which order reads as follows.. 'When this case was called for a pre-trial conference today, the plaintiff appeared assisted by himself and Atty. Gregorio M. Rubias. The defendant also appeared, assisted by his counsel Atty. Vicente R. Acsay. A. During the pre-trial conference, the parties have agreed that the following facts are attendant in this case and that they will no longer introduced any evidence, testimonial or documentary to prove them: 1. That Francisco Militante claimed ownership of a parcel of land located in the Barrio of General Luna, municipality of Barotac Viejo province of Iloilo, which he caused to be surveyed on July 18-31, 1934, whereby he was issued a plan Psu-99791 (Exhibit "B"). (The land claimed contained an area of 171:3561 hectares.) 2. Before the war with Japan, Francisco Militante filed with the Court of First Instance of Iloilo an application for the registration of the title of the land technically described in psu-99791 (Exh. "B") opposed by the Director of Lands, the Director of Forestry and other oppositors. However, during the war with Japan, the record of the case was lost before it was heard, so after the war Francisco Militante petitioned this court to reconstitute the record of the case. The record was reconstituted on the Court of the First Instance of Iloilo and docketed as Land Case No. R-695, GLRO Rec. No. 54852. The Court of First Instance heard the land registration case on November 14, 1952, and after the trial this court dismissed the application for registration. The appellant, Francisco Militante, appealed from the decision of this Court to the Court of Appeals where the case was docketed as CA-GR No. 13497-R.. 3. Pending the disposal of the appeal in CA-GR No. 13497-R and more

particularly on June 18, 1956, Francisco Militante sold to the plaintiff, Domingo Rubias the land technically described in psu-99791 (Exh. "A"). The sale was duly recorded in the Office of the Register of Deeds for the province of Iloilo as Entry No. 13609 on July 11, 1960 (Exh. "A-1"). (NOTE: As per deed of sale, Exh. A, what Militante purportedly sold to plaintiff-appellant, his son-in-law, for the sum of P2,000.00 was "a parcel of untitled land having an area Of 144.9072 hectares ... surveyed under Psu 99791 ... (and) subject to the exclusions made by me, under (case) CAi3497, Land Registration Case No. R-695, G.L.R.O. No. 54852, Court of First Instance of the province of Iloilo. These exclusions referred to portions of the original area of over 171 hectares originally claimed by Militante as applicant, but which he expressly recognized during the trial to pertain to some oppositors, such as the Bureau of Public Works and Bureau of Forestry and several other individual occupants and accordingly withdrew his application over the same. This is expressly made of record in Exh. A, which is the Court of Appeals' decision of 22 September 1958 confirming the land registration court's dismissal of Militante's application for registration.) 4. On September 22,1958 the Court of appeals in CA-G.R. No. 13497-R promulgated its judgment confirming the decision of this Court in Land Case No. R-695, GLRO Rec. No. 54852 which dismissed the application for Registration filed by Francisco Militante (Exh. "I"). 5. Domingo Rubias declared the land described in Exh. 'B' for taxation purposes under Tax Dec. No. 8585 (Exh. "C") for 1957; Tax Dec. Nos. 9533 (Exh. "C-1") and 10019 (Exh. "C-3")for the year 1961; Tax Dec. No. 9868 (Exh. "C-2") for the year 1964, paying the land taxes under Tax Dec. No. 8585 and 9533 (Exh. "D", "D-1", "G-6"). 6. Francisco Militante immediate predecessor-in-interest of the plaintiff, has also declared the land for taxation purposes under Tax Dec. No. 5172 in 1940 (Exh. "E") for 1945; under Tax Dec. No. T-86 (Exh. "E-1") for 1948; under Tax Dec. No. 7122 (Exh. "2"), and paid the land taxes for 1940 (Exhs. "G" and "G-7"), for 1945 46 (Exh. "G-1") for 1947 (Exh. "G-2"), for 1947 & 1948 (Exh. "G-3"), for 1948 (Exh. "G-4"), and for 1948 and 1949 (Exh. "G-5"). 7. Tax Declaration No. 2434 in the name of Liberato Demontao for the land described therein (Exh. "F") was cancelled by Tax. Dec. No. 5172 of Francisco Militante (Exh. "E"). Liberato Demontao paid the land tax under Tax Dec. No. 2434 on Dec. 20, 1939 for the years 1938 (50%) and 1959 (Exh. "H").

8. The defendant had declared for taxation purposes Lot No. 2 of the Psu155241 under Tax Dec. Not. 8583 for 1957 and a portion of Lot No. 2, Psu155241, for 1945 under Tax Dec. No. 8584 (Exh. "2-A" Tax No. 8583 (Exh. "2") was revised by Tax Dec. No. 9498 in the name of the defendant (Exh. "2-B") and Tax Dec. No. 8584 (Exh. "2-A") was cancelled by Tax Dec. No. 9584 also in the name of the defendant (Exh. "2-C"). The defendant paid the land taxes for Lot 2, Psu-155241, on Nov. 9, 1960 for the years 1945 and 1946, for the year 1950, and for the year 1960 as shown by the certificate of the treasurer (Exh. "3"). The defendant may present to the Court other land taxes receipts for the payment of taxes for this lot. 9. The land claimed by the defendant as his own was surveyed on June 6 and 7,1956, and a plan approved by Director of Land on November 15, 1956 was issued, identified as Psu 155241 (Exh. "5"). 10. On April 22, 1960, the plaintiff filed forcible Entry and Detainer case against Isaias Batiller in the Justice of the Peace Court of Barotac Viejo Province of Iloilo (Exh. "4") to which the defendant Isaias Batiller riled his answer on August 29, 1960 (Exh. "4-A"). The Municipal Court of Barotac Viejo after trial, decided the case on May 10, 1961 in favor of the defendant and against the plaintiff (Exh. "4-B"). The plaintiff appealed from the decision of the Municipal Court of Barotac Viejo which was docketed in this Court as Civil Case No. 5750 on June 3, 1961, to which the defendant, Isaias Batiller, on June 13, 1961 filed his answer (Exh. "4-C"). And this Court after the trial. decided the case on November 26, 1964, in favor of the defendant, Isaias Batiller and against the plaintiff (Exh. "4-D"). (NOTE: As per Exh. 4-B, which is the Iloilo court of first instance decision of 26 November 1964 dismissing plaintiff's therein complaint for ejectment against defendant, the iloilo court expressly found "that plaintiff's complaint is unjustified, intended to harass the defendant" and "that the defendant, Isaias Batiller, has a better right to possess the land in question described in Psu 155241 (Exh. "3"), Isaias Batiller having been in the actual physical possession thereof under a claim of title many years before Francisco Militante sold the land to the plaintiff-hereby dismissing plaintiff's complaint and ordering the plaintiff to pay the defendant attorney's fees ....") B. During the trial of this case on the merit, the plaintiff will prove by competent evidence the following: 1. That the land he purchased from Francisco Militante under Exh. "A" was formerly owned and possessed by Liberato Demontao but that on September 6, 1919 the land was sold at public auction by virtue of a judgment in a Civil Case entitled "Edw J. Pflieder plaintiff vs. Liberato

Demontao Francisco Balladeros and Gregorio Yulo, defendants", of which Yap Pongco was the purchaser (Exh. "1-3"). The sale was registered in the Office of the Register of Deeds of Iloilo on August 4, 1920, under Primary Entry No. 69 (Exh. "1"), and a definite Deed of Sale was executed by Constantino A. Canto, provincial Sheriff of Iloilo, on Jan. 19, 1934 in favor of Yap Pongco (Exh. "I"), the sale having been registered in the Office of the Register of Deeds of Iloilo on February 10, 1934 (Exh. "1-1"). 2. On September 22, 1934, Yap Pongco sold this land to Francisco Militante as evidenced by a notarial deed (Exh. "J") which was registered in the Registry of Deeds on May 13, 1940 (Exh. "J-1"). 3. That plaintiff suffered damages alleged in his complaint. C. Defendants, on the other hand will prove by competent evidence during the trial of this case the following facts: 1. That lot No. 2 of the Psu-1552 it (Exh. '5') was originally owned and possessed by Felipe Batiller, grandfather of the defendant Basilio Batiller, on the death of the former in 1920, as his sole heir. Isaias Batiller succeeded his father , Basilio Batiller, in the ownership and possession of the land in the year 1930, and since then up to the present, the land remains in the possession of the defendant, his possession being actual, open, public, peaceful and continuous in the concept of an owner, exclusive of any other rights and adverse to all other claimants. 2. That the alleged predecessors in interest of the plaintiff have never been in the actual possession of the land and that they never had any title thereto. 3. That Lot No. 2, Psu 155241, the subject of Free Patent application of the defendant has been approved. 4. The damages suffered by the defendant, as alleged in his counterclaim."' 1 The appellate court further related the developments of the case, as follows: On August 17, 1965, defendant's counsel manifested in open court that before any trial on the merit of the case could proceed he would file a motion to dismiss plaintiff's complaint which he did, alleging that plaintiff does not have cause of action against him because the property in dispute which he (plaintiff) allegedly bought from his father-in-law, Francisco Militante was the subject matter of LRC No. 695 filed in the CFI of Iloilo, which case was brought on appeal to this Court and docketed as CA-G.R. No. 13497-R in which aforesaid case plaintiff was the counsel on record of his father-in-law, Francisco Militante. Invoking Arts. 1409 and 1491 of the Civil Code which reads:

'Art. 1409. The following contracts are inexistent and void from the beginning: xxx xxx xxx (7) Those expressly prohibited by law. 'ART. 1491. The following persons cannot acquire any purchase, even at a public auction, either in person of through the mediation of another: . xxx xxx xxx (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights of in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring an assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession.' defendant claims that plaintiff could not have acquired any interest in the property in dispute as the contract he (plaintiff) had with Francisco Militante was inexistent and void. (See pp. 22-31, Record on Appeal). Plaintiff strongly opposed defendant's motion to dismiss claiming that defendant can not invoke Articles 1409 and 1491 of the Civil Code as Article 1422 of the same Code provides that 'The defense of illegality of contracts is not available to third persons whose interests are not directly affected' (See pp. 32-35 Record on Appeal). On October 18, 1965, the lower court issued an order disclaiming plaintiffs complaint (pp. 42-49, Record on Appeal.) In the aforesaid order of dismissal the lower court practically agreed with defendant's contention that the contract (Exh. A) between plaintiff and Francism Militante was null and void. In due season plaintiff filed a motion for reconsideration (pp. 50-56 Record on Appeal) which was denied by the lower court on January 14, 1966 (p. 57, Record on Appeal). Hence, this appeal by plaintiff from the orders of October 18, 1965 and January 14, 1966. Plaintiff-appellant imputes to the lower court the following errors: '1. The lower court erred in holding that the contract of sale between the plaintiff-appellant and his father-in-law, Francisco Militante, Sr., now deceased, of the property covered by Plan Psu-99791, (Exh. "A") was void, not voidable because it was

made when plaintiff-appellant was the counsel of the latter in the Land Registration case. '2. The lower court erred in holding that the defendant-appellee is an interested person to question the validity of the contract of sale between plaintiff-appellant and the deceased, Francisco Militante, Sr. '3. The lower court erred in entertaining the motion to dismiss of the defendant-appellee after he had already filed his answer, and after the termination of the pre-trial, when the said motion to dismiss raised a collateral question. '4. The lower court erred in dismissing the complaint of the plaintiff-appellant.' The appellate court concluded that plaintiffs "assignment of errors gives rise to two (2) legal posers (1) whether or not the contract of sale between appellant and his fatherin-law, the late Francisco Militante over the property subject of Plan Psu-99791 was void because it was made when plaintiff was counsel of his father-in-law in a land registration case involving the property in dispute; and (2) whether or not the lower court was correct in entertaining defendant-appellee's motion to dismiss after the latter had already filed his answer and after he (defendant) and plaintiff-appellant had agreed on some matters in a pre-trial conference. Hence, its elevation of the appeal to this Court as involving pure questions of law. It is at once evident from the foregoing narration that the pre-trial conference held by the trial court at which the parties with their counsel agreed and stipulated on the material and relevant facts and submitted their respective documentary exhibits as referred to in the pre-trial order, supra, 2 practically amounted to a fulldress trial which placed on record all the facts and exhibits necessary for adjudication of the case. The three points on which plaintiff reserved the presentation of evidence at the-trial dealing with the source of the alleged right and title of Francisco Militante's predecessors, supra, 3 actually are already made of record in the stipulated facts and admitted exhibits. The chain of Militante's alleged title and right to the land as supposedly traced back to Liberato Demontao was actually asserted by Militante (and his vendee, lawyer and son-in-law, herein plaintiff) in the land registration case and rejected by the Iloilo land registration court which dismissed Militante's application for registration of the land. Such dismissal, as already stated, was affirmed by the final judgment in 1958 of the Court of Appeals. 4 The four points on which defendant on his part reserved the presentation of evidence at the trial dealing with his and his ancestors' continuous, open, public and peaceful possession in the concept of owner of the land and the Director of Lands' approval of his

survey plan thereof, supra, 5 are likewise already duly established facts of record, in the land registration case as well as in the ejectment case wherein the Iloilo court of first instance recognized the superiority of defendant's right to the land as against plaintiff. No error was therefore committed by the lower court in dismissing plaintiff's complaint upon defendant's motion after the pre-trial. 1. The stipulated facts and exhibits of record indisputably established plaintiff's lack of cause of action and justified the outright dismissal of the complaint. Plaintiff's claim of ownership to the land in question was predicated on the sale thereof for P2,000.00 made in 1956 by his father-in- law, Francisco Militante, in his favor, at a time when Militante's application for registration thereof had already been dismissed by the Iloilo land registration court and was pending appeal in the Court of Appeals. With the Court of Appeals' 1958 final judgment affirming the dismissal of Militante's application for registration, the lack of any rightful claim or title of Militante to the land was conclusively and decisively judicially determined. Hence, there was no right or title to the land that could be transferred or sold by Militante's purported sale in 1956 in favor of plaintiff. Manifestly, then plaintiff's complaint against defendant, to be declared absolute owner of the land and to be restored to possession thereof with damages was bereft of any factual or legal basis. 2. No error could be attributed either to the lower court's holding that the purchase by a lawyer of the property in litigation from his client is categorically prohibited by Article 1491, paragraph (5) of the Philippine Civil Code, reproduced supra; 6 and that consequently, plaintiff's purchase of the property in litigation from his client (assuming that his client could sell the same since as already shown above, his client's claim to the property was defeated and rejected) was void and could produce no legal effect, by virtue of Article 1409, paragraph (7) of our Civil Code which provides that contracts "expressly prohibited or declared void by law' are "inexistent and that "(T)hese contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived." The 1911 case of Wolfson vs. Estate of Martinez 7 relied upon by plaintiff as holding that a sale of property in litigation to the party litigant's lawyer "is not void but voidable at the election of the vendor" was correctly held by the lower court to have been superseded by the later 1929 case of Director of Lands vs. Abagat. 8 In this later case of Abagat, the Court expressly cited two antecedent cases involving the same transaction of purchase of property in litigation by the lawyer which was expressly declared invalid under Article 1459 of the Civil Code of Spain (of which Article 1491 of our Civil Code of the Philippines is the counterpart) upon challenge thereof not by the vendor-client but by the adverse parties against whom the lawyer was to enforce his rights as vendee thus acquired.

These two antecedent cases thus cited in Abagat clearly superseded (without so expressly stating the previous ruling in Wolfson: The spouses, Juan Soriano and Vicente Macaraeg, were the owners of twelve parcels of land. Vicenta Macaraeg died in November, 1909, leaving a large number of collateral heirs but no descendants. Litigation between the surviving husband, Juan Soriano, and the heirs of Vicenta immediately arose, and the herein appellant Sisenando Palarca acted as Soriano's lawyer. On May 2, 1918, Soriano executed a deed for the aforesaid twelve parcels of land in favor of Sisenando Palarca and on the following day, May 3, 1918, Palarca filed an application for the registration of the land in the deed. After hearing, the Court of First Instance declared that the deed was invalid by virtue of the provisions of article 1459 of the Civil Code, which prohibits lawyers and solicitors from purchasing property rights involved in any litigation in which they take part by virtue of their profession. The application for registration was consequently denied, and upon appeal by Palarca to the Supreme Court, the judgement of the lower court was affirmed by a decision promulgated November 16,1925. (G.R. No. 24329, Palarca vs. Director of Lands, not reported.) In the meantime cadastral case No. 30 of the Province of Tarlac was instituted, and on August 21, 1923, Eleuteria Macaraeg, as administratrix of the estate of Vicente Macaraeg, filed claims for the parcels in question. Buenaventura Lavitoria administrator of the estate of Juan Soriano, did likewise and so did Sisenando Palarca. In a decision dated June 21, 1927, the Court of First Instance, Judge Carballo presiding, rendered judgment in favor of Palarea and ordered the registration of the land in his name. Upon appeal to this court by the administration of the estates of Juan Soriano and Vicente Macaraeg, the judgment of the court below was reversed and the land adjudicated to the two estates as conjugal property of the deceased spouses. (G.R. No. 28226, Director of Lands vs. Abagat, promulgated May 21, 1928, not reported.) 9 In the very case of Abagat itself, the Court, again affirming the invalidity and nullity of the lawyer's purchase of the land in litigation from his client, ordered the issuance of a writ of possession for the return of the land by the lawyer to the adverse parties without reimbursement of the price paid by him and other expenses, and ruled that "the appellant Palarca is a lawyer and is presumed to know the law. He must, therefore, from the beginning, have been well aware of the defect in his title and is, consequently, a possessor in bad faith." As already stated, Wolfson and Abagat were decided with relation to Article 1459 of the Civil Code of Spain then adopted here, until it was superseded on August 30, 1950 by the Civil Code of the Philippines whose counterpart provision is Article 1491.

Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs certain persons, by reason of the relation of trust or their peculiar control over the property, from acquiring such property in their trust or control either directly or indirectly and "even at a public or judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified by law. In Wolfson which involved the sale and assignment of a money judgment by the client to the lawyer, Wolfson, whose right to so purchase the judgment was being challenged by the judgment debtor, the Court, through Justice Moreland, then expressly reserved decision on "whether or not the judgment in question actually falls within the prohibition of the article" and held only that the sale's "voidability can not be asserted by one not a party to the transaction or his representative," citing from Manresa 10 that "(C)onsidering the question from the point of view of the civil law, the view taken by the code, we must limit ourselves to classifying as void all acts done contrary to the express prohibition of the statute. Now then: As the code does not recognize such nullity by the mere operation of law, the nullity of the acts hereinbefore referred to must be asserted by the person having the necessary legal capacity to do so and decreed by a competent court." 11 The reason thus given by Manresa in considering such prohibited acquisitions under Article 1459 of the Spanish Civil Code as merely voidable at the instance and option of the vendor and not void "that the Code does not recognize such nullity de pleno derecho" is no longer true and applicable to our own Philippine Civil Code which does recognize the absolute nullity of contracts "whose cause, object, or purpose is contrary to law, morals, good customs, public order or public policy" or which are "expressly prohibited or declared void by law" and declares such contracts "inexistent and void from the beginning." 12 The Supreme Court of Spain and modern authors have likewise veered from Manresa's view of the Spanish codal provision itself. In its sentencia of 11 June 1966, the Supreme Court of Spain ruled that the prohibition of Article 1459 of the Spanish Civil Code is based on public policy, that violation of the prohibition contract cannot be validated by confirmation or ratification, holding that: ... la prohibicion que el articulo 1459 del C.C. establece respecto a los administradores y apoderados, la cual tiene conforme a la doctrina de esta Sala, contendia entre otras, en S. de 27-5-1959, un fundamento de orden moral lugar la violacion de esta a la nulidad de pleno derecho del acto o negocio celebrado, ... y prohibicion legal, afectante orden publico, no cabe con efecto alguno la aludida retification ... 13 The criterion of nullity of such prohibited contracts under Article 1459 of the Spanish

Civil Code (Article 1491 of our Civil Code) as a matter of public order and policy as applied by the Supreme Court of Spain to administrators and agents in its above cited decision should certainly apply with greater reason to judges, judicial officers, fiscals and lawyers under paragraph 5 of the codal article. Citing the same decisions of the Supreme Court of Spain, Gullon Ballesteros, his "Curso de Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18, affirms that, with respect to Article 1459, Spanish Civil Code:. Que caracter tendra la compra que se realice por estas personas? Porsupuesto no cabe duda de que el caso (art.) 1459, 40 y 50, la nulidad esabsoluta porque el motivo de la prohibicion es de orden publico. 14 Perez Gonzales in such view, stating that "Dado el caracter prohibitivo delprecepto, la consequencia de la infraccion es la nulidad radical y ex lege." 15 Castan, quoting Manresa's own observation that. "El fundamento do esta prohibicion es clarisimo. No sa trata con este precepto tan solo de guitar la ocasion al fraude; persiguese, ademasel proposito de rodear a las personas que intervienen en la administrcionde justicia de todos los retigios que necesitan pora ejercer su ministerio librandolos de toda suspecha, que aunque fuere in fundada, redundura endescredito de la institucion." 16 arrives at the contrary and now accepted view that "Puede considerace en nuestro derecho inexistente 'o radicalmente nulo el contrato en los siguentes cases: a) ...; b) cuando el contrato se ha celebrado en violacion de una prescripcion 'o prohibicion legal, fundada sobre motivos de orden publico (hipotesis del art. 4 del codigo) ..." 17 It is noteworthy that Caltan's rationale for his conclusion that fundamental consideration of public policy render void and inexistent such expressly prohibited purchase (e.g. by public officers and employees of government property intrusted to them and by justices, judges, fiscals and lawyers of property and rights in litigation and submitted to or handled by them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new article of our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent and void from the beginning." 18 Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification. In his aspect, the permanent disqualification of public and judicial officers and lawyers grounded on public policy differs from the first three cases of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions it had been opined that they may be "ratified" by means of and in "the form of a new contact, in which cases its validity shall be determined only by the circumstances at the time the execution of such new contract. The causes of nullity which have ceased to exist cannot impair the validity of the new contract. Thus, the

object which was illegal at the time of the first contract, may have already become lawful at the time of the ratification or second contract; or the service which was impossible may have become possible; or the intention which could not be ascertained may have been clarified by the parties. The ratification or second contract would then be valid from its execution; however, it does not retroact to the date of the first contract." 19 As applied to the case at bar, the lower court therefore properly acted upon defendantappellant's motion to dismiss on the ground of nullity of plaintiff's alleged purchase of the land, since its juridical effects and plaintiff's alleged cause of action founded thereon were being asserted against defendant-appellant. The principles governing the nullity of such prohibited contracts and judicial declaration of their nullity have been well restated by Tolentino in his treatise on our Civil Code, as follows: Parties Affected. Any person may invoke the in existence of the contract whenever juridical effects founded thereon are asserted against him. Thus, if there has been a void transfer of property, the transferor can recover it by the accion reinvindicatoria; and any prossessor may refuse to deliver it to the transferee, who cannot enforce the contract. Creditors may attach property of the debtor which has been alienated by the latter under a void contract; a mortgagee can allege the inexistence of a prior encumbrance; a debtor can assert the nullity of an assignment of credit as a defense to an action by the assignee. Action On Contract. Even when the contract is void or inexistent, an action is necessary to declare its inexistence, when it has already been fulfilled. Nobody can take the law into his own hands; hence, the intervention of the competent court is necessary to declare the absolute nullity of the contract and to decree the restitution of what has been given under it. The judgment, however, will retroact to the very day when the contract was entered into. If the void contract is still fully executory, no party need bring an action to declare its nullity; but if any party should bring an action to enforce it, the other party can simply set up the nullity as a defense. 20 ACCORDINGLY, the order of dismissal appealed from is hereby affirmed, with costs in all instances against plaintiff-appellant. So ordered.

G.R. No. L-49219

December 11, 1946

PABLO D. PALMA, petitioner, vs. EDUARDO REYES CRISTOBAL, respondent. Vicente J. Francisco and Guillermo B. Guevara for petitioner. Antonio Gonzales for respondent. PERFECTO, J.: A parcel of a land located in Quesada Street, Tondo, Manila, covered by transfer certificate of title No. 31073 of the Register of Deeds of Manila, issued in favor of petitioner Pablo D. Palma, is the subject of contention between the parties. Petitioner sought, at first, to eject respondent Eduardo Cristobal Reyes from the land in question in a complaint filed with the Municipal Court of Manila. As respondent raised the question of ownership, the complaint was dismissed, and petitioner filed with the Court of First Instance of Manila the complaint which initiated this case, petitioner praying that he be declared the owner of the land and that respondent be ordered to restore its possession and to remove his house therefrom. The complaint was dismissed and petitioner brought the case to the Court of Appeals, where he again failed, the appealed judgment having been affirmed by a decision penned by Mr. Justice Padilla, concurred in by Mr. Justice Jose G. Generoso and Mr. Justice Pedro Tuason. The case is now before us on appeal by certiorari. In 1909, after registration proceedings under the provisions of Act No. 496, original certificate of title No. 1627 was issued in the names of petitioner and his wife Luisa Cristobal. In 1923, said certificate was cancelled and substituted by certificate of title No. 20968 by virtue of a decree issued by the Court of First Instance of Manila in connection with Manila cadastre. It was later substituted by certificate of title No. 26704, also in the name of petitioner and his wife. After the latter's death in 1922,a new certificate of title was issued in 1923 only in the name of the name of the petitioner, substituted in 1928 by certificate of title No. 31073. The Court of Appeals, upon the evidence, concluded with the Court of First Instance of Manila that the parcel of land in question is a community property held by petitioner in trust for the real owners (the respondent being an heir of one of them), the registration having been made in accordance with an understanding between the co-owners, by reason of the confidence they had in petitioner and his wife. This confidence, close relationship, and the fact that the co-owners were receiving their shares in the rentals, were the reasons why no step had been taken to partition the property. The Court of Appeals explains that it was only after the death of Luisa Cristobal and

petitioner had taken a second wife that trouble on religious matters arose between petitioner and respondent, and it gives credence to the testimony of Apolonia Reyes and respondent to the effect that Luisa, before her death, called her husband, the petitioner, and enjoined him to give her co-owners their shares in the parcel of land; but respondent told her then not to worry about it, for it was more important to them to have her cured of the malady that affected her. Petitioner answered his wife that she should not worry because he would take care of the matter by giving the co-owners their respective shares. Petitioner assigns as first error of the Court of Appeals the fact that it considered the oral testimony adduced in behalf of respondent sufficient to rebut the legal presumption that petitioner is the owner of the land in controversy. . In Severino vs. Severino (43 Phil., 343), this court declared that "the relations of an agent to his principal are fiduciary and it is an elementary and very old rule that in regard to property forming the subject-matter of the agency, he is estopped from acquiring or asserting a title adverse to that of the principal. His position is analogous to that of a trustee and he cannot consistently, with the principles of good faith, be allowed to create in himself an interest in opposition to that of his principal or cestui que trust." Affirming the said doctrine in Barretto vs. Tuason (50 Phil., 888), the Supreme Court declared that the registration of the property in the name of the trustees in possession thereof, must be deemed to have been effected for the benefit of the cestui que trust. In Palet vs. Tejedor (55 Phil., 790), it was declared that whether or not there is bad faith or fraud in obtaining a decree with respect to a registered property, the same does not belong to the person in whose favor it was issued, and the real owners be entitled to recover the ownership of the property so long as the same has not been transferred to a third person who has acquired it in good faith and for a valuable consideration. This right to recover is sanctioned by section 55 of Act No. 496, as amended by Act No. 3322. There is no showing why the conclusions of facts of the Court of Appeals should be disturbed, and upon said facts petitioner's first assignment of errors appears to be untenable in the light of law and of the decision of this court. Petitioner alleged that the Court of Appeals erred in not holding the respondent estopped from claiming that petitioner is not the absolute owner of the property in question because, after Luisa Cristobal, petitioner's wife, died in 1922, instead of moving for the partition of the property, considering specially that petitioner had promised such a partition at the deathbed of the deceased, respondent appeared as attorney for petitioner and prayed that a new certificate of title be issued in the name of said petitioner as the sole owner of the property. Petitioner insisted with energy that respondent himself was a party to the fraud upon the court, as guilty as petitioner himself, and that estops him from asserting that he is the coowner of the land involved herein.lawphil.net

There is no merit in petitioner's contention. The fact that respondent has been a party to the deception which resulted in petitioner's securing in his name the title to a property not belonging to him, is not valid reason for changing the legal relationship between the latter and its true owners to such an extent as to let them lose their ownership to a person trying to usurp it. Whether petitioner and respondent are or are not jointly responsible for any fraud upon a court of justice, cannot affect the substantial rights of the real owners of the title of a real property. Respondent is not barred because his appearance as attorney for petitioner was not a misrepresentation which would induce petitioner to believe that respondent recognized the former as the sole owner of the property in controversy. The misrepresentation could deceive the court and outsiders, because they were not aware of the understanding between the co-owners that the property be registered in the name of petitioner. The Court of Appeals found, and the finding is not now in issue, that petitioner was a party to the understanding and assumed the role of an instrument to make it effective. Respondent's appearance, as attorney for petitioner in 1923, was a consequence of the understanding, and petitioner could not legitimately assume that it had the effect of breaking or reversing said understanding. Lastly, it is contended by petitioner that, even conceding that the controverted property was owned in common by several co-owners, yet the Court of Appeals erred in not holding that, as against respondent, petitioner had acquired absolute ownership of the same through prescription. Upon the premise that the registration in 1909 in the name of petitioner and his wife, Luisa Cristobal, was in accordance with an agreement among the co-owners, petitioner advances the theory that when he, upon the death of his wife in 1922, caused the trust property to be registered in his sole name in 1923, and subsequently partitioned between himself and his daughter, Ildefonsa Cristobal Ditangco, as heirs of the decedent, "he openly breached the agreement of 1909 as well as the promise made to his dying wife of giving the co-owners their respective shares," concluding that "that breach was an assumption of ownership, and could be the basis of title by prescription." This theory holds no water because, according to the pronouncement of the Court of Appeals, upon the evidence, petitioner held the property and secured its registration in his name in a fiduciary capacity, and it is elementary that a trustee cannot acquire by prescription the ownership of the property entrusted to him. The position of a trustee is of representative nature. His position is the position of a cestui que trust. It is logical that all benefits derived by the possession and acts of the agent, as such agent, should accrue to the benefit of his principal. Petitioner's pretension of building his right to claim ownership by prescription upon his own breach of a trust cannot be countenanced by any court, being subversive of

generally accepted ethical principles. The decision of the Court of Appeals is affirmed. No costs. G.R. No. L-16917 July 31, 1962

PLARIDEL SOTTO, Administrator of the Testate Estate of Vicente Sotto, petitioner-appellant, vs. QUINTILLANA SAMSON (SANSON), respondent-appellee. Ricardo Summers for petitioner-appellant. Rama Law Offices for respondent-appellee. BENGZON, C.J.: Statement of the case. This is a review of the judgement of the Court of Appeals affirming the decision of the First Instance of Cebu in a litigation which began a complaint of Quintillana Samson (Sanson) to annul sale of a lot executed by her in favor of defendant Vicente Sotto. She alleges that, as her attorney, Sotto had taken advantage of her financial difficulties and mental weakness and of the confidence she had reposed in him. As special defenses, Sotto averred that the action already prescribed; that judicial license had been granted her to dispose of said lot; that there was due consider for the purchase P21,595.00; and that she was estopped from asserting this claim because she had ratified the sale on various occasions, once after the passage of the Paraphernal Property Act No. 3922 (authorizing a married woman to dispose of her paraphernal property without consent of her husband). Vicente Sotto died while the case was pending decision; and upon orders of the lower court, he was substituted as defendant by the administrator of his estate. (We shall, however, herein refer to him as the litigant Sotto, although the judgment shall be against or in favor of, said administrator as such). On November 29, 1954, the Cebu court decided in favor of plaintiff Samson. Upon appeal, the Court of Appeals affirmed the decision in all respects. Issues. Petitioner Sotto alleges here that said appellate court erred in holding: 1. that the sale is null and void; 2. that the new deed of sale of September 17, 1932 executed by Samson in favor of Sotto, (after Act No. 3922 had been approved, and after all the cases in which appellant intervened for appellee had terminated) is also null and void; and 3. that this action, (in 1941) has not prescribed. In general, only questions of law may be discussed in this review, because we regard the facts found by the Court of Appeals to be binding on us. Facts. From the evidence of record, the Court of Appeals made the following findings of

fact: . . . that since 1924 Atty. Sotto was appellee's counsel in several cases in which the adverse party was her husband, Manuel Carratala, from whom she was estranged; that sometime in March 1926, Atty. Sotto, acting as counsel for appellee, filed a petition with the Court of First Instance of Cebu (Civil Case No. 6448) requesting for judicial authority to sell her paraphernal property without the need of her husband's consent; that having learned of such petition, Manuel Carratala in turn filed on May 7, 1926, Civil Case No. 6528 asking the same court to annul or prevent any conveyance of said paraphernal property, and obtained a writ of injunction forbidding both appellee and Atty. Sotto from carrying out the sale and registering any conveyance of property with the register of deeds; that on May 11, 1926, although appellee's petition for judicial authority was still pending, and regardless of the writ of injunction, appellee Samson (Sanson) executed a deed of sale whereby she sold and conveyed to her counsel, Atty. Sotto, her paraphernal property known as lot No. 872 of the Cadastral Survey of Cebu with the improvements existing thereon; that Atty. Sotto gave appellee an option to repurchase the property within two years; which was extended to another two years; and that the deed was presented for registration but the register of deeds of Cebu refused to register the same. . . .; that on May 16, 1926 appellee left Cebu for Manila; that upon her arrival in the city (of Manila) another petition for judicial authority was filed with the Court of First Instance of Manila; that having failed to appear at the hearing although he was duly notified thereof, her husband was declared in default and the case was decided in her favor by Judge Eulogio Revilla; that on the day after she had obtained judicial authority to dispose of her property, she executed a confirmation deed of the original sale: and that Atty. Sotto succeeded in having Original Certificate of Title No. 681 in appellee's name cancelled and a new one issued in his name. . . . That the decision of the Manila Court having reversed by the Supreme Court, Atty. Sotto filed another petition for judicial authority with the said Manila Court but this time the same was assigned to Judge Anacleto Diaz; that without notifying appellee's husband on the alleged ground that he was abroad as he was hunted as a leper, the petition was heard in his absence; that after the hearing, the court granted to appellee the judicial authority sought by her; and that by virtue thereof, she executed another confirmation deed of the sale in Atty. Sotto's favor but the same was invalidated by the Supreme Court when it revoked the decision of Judge Diaz. . . . That on the other hand, the Cebu Court decided Civil Case No. 6528 in favor of appellee's husband, thereby declaring null and void the sale of her paraphernal property in favor of her counsel; that Atty. Sotto appealed to the Supreme Court

but later withdrew the appeal after the Philippine Legislature enacted Act No. 3922 authorizing a married woman to dispose of her paraphernal property without her husband's consent; and that six days after the passage of said law, Atty. Sotto had the third ratification deed executed by appellee in his favor. Discussion. In resolving the question whether or not the sale was null and void, the Court of Appeals agreed with Samson's contention that inasmuch as Article 1459 of the Civil Code mentions property which is the object of any litigation in which the attorney may take part, it follows that Sotto fell within its inhibition. On the other hand petitioner maintains that said Article 1459 should read: ART. 1459. The prohibition contained in No. 5 shall apply to lawyers and solicitors with respect to property or rights that are the object of a litigation IN WHICH THEY INTERVENE by their profession or office. And then he insists that this sale could not be banned inasmuch as at the time of its execution, he (Sotto) was not yet the attorney of record in said Case No. 6528 he had not yet been served with summons relative to the said complaint. Another point brought up by petitioner Sotto is that the contract being merely voidable, it is susceptible of ratification; that in the instant case, the revalidation and confirmation has been accomplished by no less than four (4) documents executed by appellee, specially the ratification sale Exh. 1 signed by her after the passage of the Paraphernal Act No. 3922, authorizing married women to dispose of their paraphernal property without their husband's consent. Referring to this last deed of sale Exh. 1 appellant repeatedly maintains that the same is not only a confirmation and validation of the original sale of May 11, 1926, but also a completely new sale; that such a construction is inevitable considering appellee's declaration therein:1 Que haciendo uso del derecho que me concede la nueva Ley No. 3922 para disponer libremente de mis bienes propios y parafernales, sin licencia de mi marido por la presente CONFIRMO Y REVALIDO la venta definitiva arriba mencionada (de 11 de Mayo, 1926) en los mismos terminos en que fue otorgada por mi en dicha fecha, y con el mismo valor ya efecto que AHORA LA OTORGO y la ratifico expontaneamente, libre de toda carga y gravamen, quedando ipso facto, consolidado el domino del Sr. Vicente Sotto, sobre el referido lote y sus mejoras. On this paramount issue, we must declare that on May 11, 1926 when this sale was first agreed upon, Sotto was Samson's lawyer in a litigation involving the subject of the contract. Therefore, Sotto was disqualified to buy under article 1459 of the Civil Code, which according to Fisher's translation which we deem correct reads as follows: ART. 1459. The following persons cannot take by purchase, even at a public or

judicial auction, either in person or through the mediation of another: xxx xxx xxx 5. Justices, judges, members of the department of public prosecution, clerks of superior and inferior courts and other officers of such courts, the property and rights on litigation before the court within whose jurisdiction or territory they perform their respective duties. This prohibition shall include the acquisition of such property by assignment. . . . The prohibition contained in this fifth paragraph shall include lawyers and solicitors with respect to any property rights involved in any litigation in which they may take part by virtue of their profession and office. Certainly, on said date there was pending in the Court of First Instance of Cebu Civil Case No. 6448 which was a litigation2 handled by Sotto as the lawyer, concerning the same lot. The husband objected to the wife's plan to sell; so much so that he filed on May 7, 1926 a petition to annul whatever conveyance his wife may have made or attempted to make (Civil Case No. 6528). Indeed, because of their client-attorney relationship Sotto probably unduly influences Samson, not only to sell the lot to him but also to accept terms less favorable to her. But Sotto claims that the action has prescribed because it was filed only in 1941, i.e., fifteen years after May, 1926. It must be realized, however, that the complainant really seeks the annulment of the document made by Samson in 1932 Exh. 1 after the approval of Act No. 3922. Recall that according to the Court of Appeals the Court of Cebu in Civil Case 6528, declared her sale in 1926 to Sotto to be void; that Sotto appealed such declaration to the Supreme Court, and after the approval of Act 3922 Sotto moved for withdrawal of his appeal; which motion was subsequently granted. No need therefore to discuss the document (1926) or documents of sale (the ratifications) before Act 3922. Those have been avoided by the Court of First Instance of Cebu in a decision which became final upon the withdrawal of Samson's appeal. In fact petitioner here insistently maintains that the document Exh. 1 was a "new contract of sale" and relies thereon to retain the property. (pp. 20, 21, 52, 54, 61, et seq., printed brief)3 Hence, we repeat, the document to be avoided, is the one executed by Samson in 1932 (Exh. 1) after the withdrawal of the appeal. Now then, in 1941 when this action was commenced, less than ten (10) years had elapsed: 1932-1941. It is argued, however, that when this document Exh. 1 was executed (Sept. 17, 1932) the litigation involving the property had already terminated because on that date Sotto had filed the motion to withdraw Samson's appeal. The argument has no merit, since the litigation had not terminated on September 17, 1932, it appearing that this Supreme Court granted the motion only on Sept. 26, 1932. Up to that time, at least, the appeal in which Sotto represented Samson was pending in court.

We find it unnecessary to go into other incidental contentions discussed in petitioner's brief. Many are immaterial; others are sufficiently met or explained in respondent's brief in the Court of Appeals. The undeniable core of the matter is the conveyance of a litigant's property made during the existence of attorney-and-client relationship; and the statute prohibiting such sales which is designed to curtail any undue influence of the lawyer upon his client on account of their confidential association. In this connection, in examining the phase on prescription from 1926 to 1941 as claimed by Sotto and impressed by Samson's argument about an attorney's "bad faith, disregard of conscience, court orders, laws and legal ethics", but reluctant to adopt the appellate court's ruling that prescription could not run because the contract was void ab initio,4 the thought struck us in the light of some remarks of Samson's counsel that perhaps it may be desirable, in situations like this, to apply a rule that the period of prescription should be counted only from the severance of the attorney-and-client bonds; because it is only then that the controlling influence of the attorney has ceased.5 However, no pronouncement on this subject is needed, since this client's right may be sufficiently protected thru the line of approach we have already indicated. Nonetheless, protection may not be so extended as to allow her to unjustly profit at the expense of her attorney by retaining the money or consideration given to her for the sale. Under Art. 1303 of the Civil Code when a sale is avoided, the seller shall return the purchase price, together with interest. The total consideration given by Sotto to Samson amounts to P21,595.00 (Exh. 3). This requires one modification of the judgment of the Court of Appeals affirming the decision of the court of first instance, which decision in its dispositive part, reads as follows: IN VIEW THEREOF, this Court hereby pronounces judgment: (1) Declaring the aforementioned sale in favor of defendant, dated May 11, 1926 and the subsequent deeds of ratification executed on June 17, 1926, September 11, 1928, and September 17, 1932 (Exhs. A, A-1, K and Exh. 1, respectively), null and void "ab initio"; (2) Ordering defendant to restore or reconvey to plaintiff the property in question with all its improvements thereon (Lot No. 872 Cadastral Survey of Cebu) under Transfer Torrens Certificate of Title No. 0-628 (T-681, 1941); in case this is no longer possible, pay the plaintiff its value as of the date of the rendition of this judgment; (3) Ordering defendant to pay the equitable rentals on said property from May 11, 1926 to July 1941, plus legal interest thereon until fully paid; and (4) Ordering plaintiff to pay Attorney Paulino Gullas or his heirs the sum of P738.33 as attorney's fees, the defendant to pay the costs.

Now, if as we propose to do, such appellate judgment is affirmed with the modification indicated, the next step would ordinarily be to remand the record for determination of the amount to be paid by Sotto, (should he be unable to retransfer the property itself) and to fix the rentals payable by him. However, aware of the many years this case has been pending in the courts, and desirous of expediting the disposition of the controversy, we have searched the records and found facts not covered in the Court of Appeals' decision: First, the Cebu court in an amendatory order fixed the value of the realty at P70 pesos per square meter (p. 361, Record on Appeal). Second, the parties agreed at the trial that the rents of the property could be fixed at P100 pesos a month (pp. 179. 186, Record on Appeal). To overlook these things would unduly prolong this litigation. Judgment: Wherefore, it is our judgment that the decision of the Court of Appeals should be, and is hereby affirmed, with these additional directives: (a) In case Sotto can not return the lot to Samson he shall pay for it (786 sq. m.) at the price of P70 pesos per square meter; (b) Sotto shall also pay rents at the rate of P100 pesos a month from Sept. 17, 1932; (c) Samson shall in turn pay Sotto the amount of P21,595.00 plus legal interest from Sept. 17, 1932. No pronouncement as to costs. So ordered. A.M. No. 3216 March 16, 1992 DOMINGA VELASCO ORDONIO, petitioner, vs. ATTY. JOSEPHINE PALOGAN EDUARTE, respondent. RESOLUTION PER CURIAM: This is a complaint for the disbarment of respondent Atty. Josephine Palogan-Eduarte originally filed with this Court on April 18, 1988. On August 10, 1989, the Commission on Bar Discipline of the Integrated Bar of the Philippines, to which the case was referred for investigation, submitted a report confirming in substance the charge of violation of Art. 1491 of the Civil Code and part of the Oath of Office of a lawyer and recommending the suspension of herein respondent. The evidence discloses that on July 18, 1983, Antonia Ulibari filed with the RTC, Branch XXII, Cabagan, Isabela, Civil Case No. 391 for annulment of a document (known as Affidavit of Adjudication of the Estate of Felicisimo Velasco and Quitclaim Thereof) against her children. The case was handled by Atty. Henedino Eduarte, herein respondent's husband, until his appointment as RTC judge on October 26, 1984. His wife, Atty. Josephine Palogan-Eduarte, took over. On August 22, 1985, decision in Civil Case No. 391 was rendered in favor of Antonia Ulibari. Except for Dominga Velasco-

Ordonio, one of the children of Antonia Ulibari and complainant in the instant case, the rest of the defendants did not appeal. On June 13, 1987, while Civil Case No. 391 was pending appeal in the Court of Appeals, Antonia Ulibari conveyed some parcels of her land to her children in the form of deeds of absolute sale, prepared and notarized by herein respondent. Significantly, on the same day, Antonia Ulibari also conveyed 20 hectares of land to herein respondent and her husband as their Attorney's fees for legal services rendered. All the titles of the lands subject of the deeds of absolute sale and the deed of conveyance however remained in the name of Antonia Ulibari. On April 4, 1988, Dominga Velasco-Ordonio filed this complaint for disbarment against herein respondent on the basis of an affidavit executed by her mother Antonia Ulibari on March 2, 1988 stating that affiant never conveyed the subject parcel of land to respondent as her attorney's fees and that the deeds of absolute sale executed in favor of her children were not known to her (and that she received no consideration therefor). On August 10, 1989, the Investigation Commissioner submitted a report finding the charges to be true and recommending a one-year suspension of the respondent from the practice of law. The first issue to be resolved is whether Antonia Ulibari was defrauded into signing the Deed of Conveyance transferring to her lawyer (herein respondent) the subject parcel of land containing 298,420 square meters as the latter's attorney's fees. It is clear from Antonia Ulibari's affidavit and deposition that she never conveyed the said land to her lawyer as attorney's fees. Even granting for the sake argument that Antonia Ulibari knowingly and voluntarily conveyed the subject property in favor of the respondent and her husband, the respondent, in causing the execution of the Deed of Conveyance during the pendency of the appeal of the case involving the said property, has violated Art. 1491 of the Civil Code which prohibits lawyers from "acquiring by assignment property and rights which may be the object of any litigation in which they may take part by virtue of their profession." In the case at bar, the property (which includes the more than 20 hectares of land allegedly conveyed to the respondent) was already in actual litigation first in the lower court and then in the Court of Appeals. Whether the deed of conveyance was executed at the instance of the client driven by financial necessity or of the lawyers is of no moment (In re: Atty. Melchor E. Ruste, 70 Phil. 243). "In either case, an attorney occupies a vantage position to press upon or dictate his terms to a harrased client, in breach of the rule so amply protective of the confidential relations, which must necessarily exist between attorney and client, and of the rights of both." The act constitutes malpractice, even if the lawyer had purchased the property in litigation. (Hernandez v. Villanueva, 40 Phil. 775; In re: Calderon, 7 Phil. 427). We agree with the Investigating Commissioner's opinion that the prohibition applies when the lawyer has not paid money for it and the property was merely assigned to him in consideration of legal services rendered at a time

when the property is still the subject of a pending case. For having improperly acquired the subject property, under the foregoing circumstances, respondent has violated not only Art. 1491 of the Civil Code but also Rule 10 of the Canons of Professional Ethics which provides that "the lawyer should not purchase any interest in the subject matter of the litigation which he is conducting." The last issue to be resolved is whether respondent violated any law in preparing and notarizing the deeds of absolute sale in making it appear that there were considerations therefor, when in truth there were none so received by the seller. In her answer, respondent admitted that Antonia Ulibari did not actually sell the parcels of land to her children for the considerations stated in the deeds of sale and that she (respondent) "utilized the form of deed of sale as the most convenient and appropriate document to effect the transfer of the parcels of land to Antonia Ulibari's children in accordance with her wish that said parcels of land be given to them. In so doing, respondent has manifestly violated that part of her oath as a lawyer that she shall not do any falsehood. Not only that. In preparing the documents which do not reflect the true transaction, respondent has likewise violated Rule 10.01 of the Code of Professional Responsibility which provides: Rule 10.01. A lawyer shall not do any falsehood, nor consent to the doing of any in court; nor shall be mislead or allow the court to be mislead by any artifice. ACCORDINGLY, for having violated Article 1491 of the Civil Code, respondent is hereby ordered suspended from the practice of law for a period of six (6) months, and, for having stated falsehoods in the four (4) deeds of absolute sale she prepared and notarized, in violation of the lawyer's oath and Rule 10.01 of the Code of Professional Responsibility, respondent is also ordered suspended from the practice or law for a period of another six (6) months, resulting in a total period on one year, effective from the date this judgment becomes final. SUSPENSION ORDERED. A.M. No. 632 June 27, 1940

In re Attorney MELCHOR E. RUSTE, respondent, The respondent in his own behalf. Office of the Solicitor-General Hilado for the Government. LAUREL, J.: By virtue of an administrative complaint filed by Mateo San Juan against Melchor E. Ruste on February 27, 1934, to which the respondent made answer on March 15, 1934, this Court, by resolution of December 1, 1934, referred the case to the Solicitor-General

for report. The reference brought forth the following formal complaint filed by the Solicitor-General against the respondent on March 26, 1935: Comes now the undersigned Solicitor-General of the Philippine Islands in the above entitled administrative case, and pursuant to the provisions of Rule 5 of the rules concerning disbarment or suspension of attorneys-at-law, to this Honorable Supreme Court, respectively alleges: 1. That in cadastral case No. 6, G. L. R. O. Record No. 483 of the Court of First Instance of Zamboanga, the respondent, Melchor E. Ruste, appeared for and represented, as counsel, Severa Ventura and her husband, Mateo San Juan, the herein complainant, who claimed lot No. 3765; and as a result of said cadastral proceedings, an undivided eleven-twentieth (11/20) share of said lot was adjudicated by said court to said claimants; 2. That there was no agreement the respondent and his said clients as to the amount of his fees; but that they paid to him upon demand on different occasions the sums of (30 and P25 as attorney's fees; 3. That after said payments, the respondent again demanded of the complainant and his wife as additional fees the sum of P25, but they had no money to pay, him, and so he asked them to execute in his favor a contract of lease, and a contract of sale, of their share in said lot No. 3764 in order that he may be able to borrow or raise said sum of P25; 4. That in accordance with said respondent's request, the complainant and his wife executed on September 22, 1930, a contract of lease, whereby in consideration of P100, they leased to him their coconut and banana plantation in said lot No. 3764 for a term of five years, and also a deed of sale, whereby in consideration of P1,000, they sold and transferred to him their undivided eleven-twentieth (11/20) share in said lot No . 3764, although, ,in fact and in truth, neither of the consideration mentioned in said contracts of lease and sale were ever receive by them; 5. That on March 21, 1931, the respondent executed a deed of sale, whereby in consideration of P370 he sold and transferred to Ong Chua said undivided eleventwentieth (11/20) share in lot No. 3764 excluding the house and its lot, occupied by the complainant and his wife; and on March 28, 1931, the respondent executed another deed of sale, whereby in consideration of the same amount of P370 paid to him by the same Ong Chua, he sold and transferred to the latter the same undivided eleven-twentieth (11/20") share in lot No. 3764, but already including said houses and its lot; 6. That by virtue of the sale to him, Ong Chua has taken possession of said eleven-twentieth share in lot No. 3764; 7. That notwithstanding said second deed of sale, the respondent obtained from

Ong Chua to allow the complaint and his wife to continue living house for a period of two years without paying any rent; 8. That on October 10, 1933, however, the respondent notified the complainant and his wife in writing that the said house still belonged to the respondent, and requires said spouses to pay, the sum of P40.50, representing ten months' rental in arrears, and thereafter a monthly rental of P1.50; and 9. That the respondent did not turn over to the complainant and his wife the amount of P370 paid by Ong Chua nor any part thereof. Wherefore, the undersigned prays that disciplinary action be taken against the respondent. To the foregoing complaint, the respondent, on April 23, 1935, interposed the following answer: Comprarece el infrascrito, en su propiarepresentacion y a la Honorable Corte Suprema, alega: Niega, general y especificamente sus alegaciones en dicha demanda, sobretodo en cuanto al pago de cantidades monetarias alli especificadas, y como defensa especial, alega: Que el denunciante Mateo San Juan, y sus testigos Esperato Bucoy y Severa Ventura han infringido la Ley del Perjurio; ademasd el Fiscal Provincial Jose Evangelista es una parte interesada en el resultado de este asunto; Por todo lo expuesto, al Honorable Tribunal pide: (a) Que para la substanciacion de esta causa que actue de Fiscal, el Honorable Enrique Braganza, Fiscal de Jolo, Sulu; (b) Que dicho Honorable Fiscal Enrique Braganza, sea requerido a investigar a los testigos, Esperato Bucoy y Severa, Ventura, y la Ley del Perjirio tal como esta enmendada. Sometido respetuosamente. By resolution of this court of April 24, 1935, the said formal complaint and answer were referred to the judge of First Instance of Zamboanga for investigation, report, and recommendation. After various and postponements, transpiring between August 3, 1935 and October 18, 1939, the Honorable Catalino Buenaventura, then presiding over the Court of First Instance of Zamboanga, elevated the record of the case of this court. On October 31, 1939, the case was included in the January, 1940 calendar, and at the hearing thereof on February 1, 1940, the respondent submitted the case without oral argument, and the memorandum presented by the Solicitor-General, recommending the dismissal of the complaint filed against respondent, was ordered attached to the record. From a perusal of the entire record, particularly of the formal complaint filed by the

Solicitor-General against the respondent attorney, we gather the following material charges formulated against the latter, to wit, (1) that he engineered the execution in his favor, by the spouses Mateo San Juan and Severa Ventura, of the contract of lease, Exhibit A, and of the deed of sale, Exhibit B, covering the property in question; (2) that he did turn over the considerations therefor to the said spouses; (3) that he likewise deeded the same property to one Ong Chua, for P370, without paying the spouses the said purchase price, and (4) that he required the spouses to pay (40.50 for ten months' rental in arrears, and thereafter a monthly rental of P1.50 for the house occupied by the said spouses. Sometime in July, 1930, the respondent acted as counsel for the complainant and his wife when the latter laid claim of ownership upon lot No. 3764 in case No. 6, G. L. R. O., Cadastral Record 483 of the Court of First Instance of Zamboanga, eleven-twentieth of said lot having been eventually adjudicated to the wife, Severa Ventura, on December 20, 1933. On September 22, 1930, that is, during pendency of said cadastral case, the spouses purportedly leased a part of said lot to the respondent for P100, which lease was cancelled and superseded by a deed of sale executed on the same date, whereby the said spouses, in consideration of P1,000, conveyed eleven-twentieth of the same land in favor of the respondent. This is also the finding of the Solicitor-General in his report submitted in this case: . . . convinieron cancelar el arrendamiento y otorgar en sustitucion un contrato de compraventa absoluta a favor del recurrido, como en efecto se hizo y es el Exhibito B (pp. 37-38, Rollo 1), por cuyo documento Severa Ventura con el consentimiento marital correspondiente vendio definitivamente al recurrido su participacion pro indivisa da 11/20 partes en el rferido lote, y estando aun el mismo pendiente de vista u decision el Expediente Catastral No. 6, Record No. 483, del Juzgado de Primera Instancia de Zamboanga. (Pp. 19-20.) The property being thus in suit, which the respondent was waging on behalf of his clients, his acquisition thereof by the deed of sale, Exhibit B, constitutes malpractice. (Hernandez vs. Villanueva, 40 Phil., 775; In re Calderon, 7 Phil. 427.) Whether the deed of sale in question was executed at the instance of the spouses driven by financial necessity, as contended by the respondent, or at the latter's behest, as contended by the complainant, is of no moment. In either case as attorney occupies a vantage position to press upon or dictate his terms to a harassed client, in breach of the "rule so amply protective of the confidential relations, which must necessarily exist between attorney and client, and of the rights of both." (Hernandez vs. Villanueva, supra.) There is evidence to show that the respondent has failed to account to the aggrieved spouses for the various amounts received by him on account of the transactions effected by him pertaining to the portion of lot No. 3764. However, as the evidence is conflicting and the statements of the parties are contradictory on this point, it is believed that the determination of the exact amount due them by the respondent should better elucidated

and determined in an appropriate action which the complaint and his spouse may institute against the respondent for this purpose. For having improperly acquired the property referred to in Exhibits A and B, under the above circumstances, which property was then subject matter of a judicial proceedings, in which he was counsel, the respondent is found guilty of malpractice and is hereby suspended for a period of one year, reserving to the complainant and his spouse such action as may by proper for the recovery of such amount or amounts as may be due from the respondent. So ordered. A.C. No. 724 January 31, 1969

FLORENTINO B. DEL ROSARIO, complainant, vs. EUGENIO MILLADO, respondent. RESOLUTION CONCEPCION, C.J.: Complainant Florentino B. del Rosario seeks the disbarment of respondent, Attorney Eugenio Millado, upon the ground that the latter had committed malpractice, in violation of Article 1491 of the Civil Code of the Philippines and Canon No. 10 of the Canons of Legal Ethics, by acquiring an interest in the land involved in a litigation in which he had taken part by reason of his profession; that said interest was adverse to that of his client in the aforementioned litigation; and that he filed therein pleadings containing allegations which were inconsistent with those made in another pleading subsequently filed by him in the same proceedings, as well as false. In his answer to these charges, respondent alleged that his interest in said land had been acquired before he intervened in said proceedings, as counsel for one of the parties therein; that his client therein was aware of his aforementioned interest; that there is no conflict between the same and that of his client; and that there is neither a false allegation of facts in the pleadings alluded to in the complaint herein nor any inconsistency between said pleadings. By way of "counterclaim," respondent alleged, also, that the present charges had been preferred as a means to offset an action for damages and some criminal charges filed by him against complainant herein. After due investigation conducted by the office of the Solicitor General, to whom said charges were referred therefor, the aforementioned officer submitted his report exonerating, in effect, respondent herein. Indeed, the provisions of the Civil Code and of the Canons of Legal Ethics, prohibit the purchase by lawyers of any interest in the subject matter of the litigation in which they participated by reason of their profession, and complainant herein has not established a violation of such injunction. In this connection, respondent introduced

evidence, which is uncontradicted, to the effect that one Eladio Tiburcio, now deceased, claimed title to a tract of land of about 430 hectares, in Diliman, Quezon City; that parts of said land were the object of two (2) ejectment cases of the City Court of Quezon City, against La Paz Mesina Vda. de Pascual, one of the heirs of said deceased, one filed by herein complainant, Florentino B. del Rosario, and the other by Leonor Sta. Clara; that prior to the institution of said cases, one Conrado Baluyot, who claims to be another heir of Eladio Tiburcio, offered to allow respondent to construct a house on part of said land of about 430 hectares, in consideration of his professional services in defense of the claim thereto of the Tiburcios; that Baluyot's understanding with respondent was that, should he succeed in securing a decision favorable to the Tiburcios, he (respondent) could buy the land on which his house was built, namely, lots 4 and 5 of Block E-102 of Quezon City, by paying the current value thereof; that Mrs. Pascual, who occupied another lot in the same block, knew that respondent was in possession of said lots 4 and 5 and had constructed a house thereon, by agreement with Baluyot, as one of the heirs of the deceased; that Mrs. Pascual, who claimed an interest in the whole Block E-102, asked respondent to be her counsel in said ejectment cases; that, after filing the answer of Mrs. Pascual, as defendant in said two (2) cases, respondent ceased to be her counsel therein; and that, although in her aforementioned answer, he alleged that Mrs. Pascual was the owner and possessor of the lots involved in said cases, there is no real inconsistency between this allegation and his claim over said lots 4 and 5, much less a misrepresentation of facts, because the issue in the ejectment cases hinged upon the right of possession whereas the alleged ownership of Mrs. Pascual merely tended to bolster up her alleged prior possession, and because he could not acquire title to said lots 4 and 5 from the heirs of the late Eladio Tiburcio, unless they and, hence, Mrs. Pascual, as one of the heirs of the deceased were the true owners thereof.1awphil.t Thus, the records show that respondent's alleged interest in said lots was acquired before he intervened as counsel for Mrs. Pascual in the ejectment cases against her and that said interest is not necessarily inconsistent with that of his aforementioned client, aside from the fact that he had made no substantial misrepresentation in the pleadings filed by him in said cases. This fact and the absence of said conflict are made more manifest by the circumstance that the charges under consideration have been preferred, not by Mrs. Pascual, but by her opponent in one of the ejectment cases above mentioned.1awphil.t Finding no merit in the complaint herein, the same is, accordingly, dismissed. It is so ordered. G.R. No. L-26882 April 5, 1978 ROSARIO VDA. DE LAIG, ROMEO, JOSE, NESTOR and BENITO, JR., all surnamed LAIG, minors, assisted by Rosario Vda. de Laig, Their Guardian Ad Litem, petitioners,

vs. COURT OF APPEALS, CARMEN VERZO, PETRE GALERO, THE REGISTER OF DEEDS OF CAMARINES NORTE, THE DIRECTOR OF LANDS, AND THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, respondents. Gelasio L. Dimaano for petitioners. Pedro A. Venida for private respondents. Office of the Solicitor General for respondents The Director of Lands, etc., et al. MAKASIAR, J.: Appeal by certiorari from the decision of respondent Court of Appeals which affirmed the judgment of the Court of First Instance of Camarines Norte in Civil Case No. 577 entitled "Rosario Vda. de Laig, et al. vs. Carmen Verzo, et al.," dismissing herein petitioners' complaint for the reconveyance of a parcel of land with damages, and declaring herein respondent Carmen Verzo as the lawful owner of the land in issue. It appears that on March 27, 1939, one Petre Galero obtained rained from the Bureau of Lands Homestead Patent No. 53-176 covering 219,949 square meters of land located at Barrio Pinagtambangan, Labo, Camarines Norte, for which Original Certificate of Title No. 1097 was issued in Galero's name. On June 25, 1940, Galero sold the land to a certain Mario Escuta for P300.00. Escuta in turn, sold the same land to Florencio Caramoan in December, 1942, Later, however, Petre Galero, through proper court action, and with Atty. Benito K. Laig the deceased husband of herein petitioner Rosario Vda. de Laig as counsel recovered the land, the court having been convinced that its alienation violated Section 118 of the Public Land Act, which reads: No alienation, transfer, or conveyance of any homestead after five years and before twenty-five years after issuance of title shall be valid without the approval of the Secretary of Agriculture and Commerce, which approval shall not be denied except on constitutional and legal grounds (Sec. 118, CA No. 141, as amended by CA No. 456). On June 1, 1948, a deed of sale was executed by and between Petre Galero as vendor and Atty. Benito K. Laig as vendee, whereby the former sold to the latter the land in question with its improvements, for P1,500.00 plus attorney's fees due Atty. Laig for his legal services as counsel for Galero in the successful reconveyance case (p. 87, rec.; People vs. Petre Galero, CA-G.R. No. 12043-R). This deed of sale was executed in the house of Carmen Verzo and witnessed by one Claudio Muratalla and Rosario Verzo Villarente (p. 87, back, rec., People vs. Petre Galero, supra), sister of herein respondent Carmen Verzo, who was living with her in the same house at that time. Original Certificate of Title No. 1097 was delivered by Galero to Atty. Laig (Exh. J and

Annex B, p. 6, CA Brief for Petitioners, p. 137, back, rec.). Unfortunately, vendee Atty. Benito K. Laig failed to solicit the approval of the Secretary of Agriculture and Natural Resources (then Secretary of Agriculture and Commerce), as required by Section 118 of the Public Land Act, as amended. It was only after Atty. Laig's death in 1951 that his wife, herein petitioner Rosario, noticed the deficiency. On November 5, 1951, herein petitioner Vda. de Laig wrote the then Register of Deeds of Camarines Norte, respondent Baldomero M. Lapak, stating that the disputed parcel of land covered by original Certificate of Title No. 1097 in the same of Petre Galero, had been sold to her late husband, requesting that she be informed of any claim of ownership by other parties so that she could take the necessary steps, and serving notice of her claim over the said property as surviving spouse of the late Atty. Laig and as natural guardian of their children. On November 12, 1951, Register of Deeds Lapak replied that Original Certificate of Title No. 1097 was still intact and took note of her letter. On March 29, 1952, petitioner Vda. de Laig filed with the Bureau of Lands an affidavit together with copy of the deed of sale in her husband's favor. Said affidavit stated that she wanted to have the ownership over the land transferred to her husband's name. On August 14, 1952, the Bureau of Lands forwarded the said affidavit of Vda. de Laig, together with the deed of sale, to the Office of the Secretary of Agriculture and Natural Resources with a recommendation that the said deed of sale be approved as the same does not violate any pertinent provisions of the Public Land Act or the corresponding rules and regulations thereunder promulgated. On the same day, the Office of the Secretary of Agriculture and Natural Resources, thru then Undersecretary Jose S. Camus, approved the deed of sale. And also on the same day, the Office of the Director of Lands, thru Vicente Tordesillas, Chief of the Publication Lands Division, addressed a letter to Atty. Benito Laig informing him of the approval of the deed of sale executed by and between him and Petre Galero. Meanwhile, however, on July 15, 1952, Petre Galero, with the assistance of Atty. Jose L. Lapak, son of respondent Register of Deeds Baldomero M. Lapak sought in court the issuance of a second owner's duplicate copy of OCT No. 1097, claiming that his first duplicate of said OCT was lost during World War 11. On July 19, 1952 or in a span of only four days - a second owner's duplicate copy of OCT No. 1097 was issued by respondent Register of Deeds Baldomero M. Lapak in favor of Petre Galero. And right on that same day, Galero executed in favor of respondent Carmen Verzo a deed of sale of the land in issue for the sum of P600.00. It was claimed that previously, the additional consideration of P500.00 in Japanese war notes was received by Galero from Carmen Verzo, although this amount, or anything to that effect, was not mentioned in the deed of sale executed by and between them. Upon being informed that the sale necessitates the approval of the Secretary of

Agriculture and Natural Resources before it could be registered in the Register of Deeds, herein respondent Carmen Verzo, on July 30, 1952, addressed a letter to the Secretary of Agriculture and Natural Resources, through the Director of Lands, seeking the former's required approval Enclosed in the letter was a copy of the deed of sale in Verzo's favor, and an affidavit that the land in point was sold to Verzo by homestead grantee Petre Galero. On August 30, 1952, Assistant Director of Lands Zoilo Castrillo forwarded Verzo's papers to the Secretary of Agriculture and Natural Resources and recommended that the sale, not being violative of the pertinent provisions of the Public Land Act nor the rules and regulations promulgated thereunder, be approved. On September 12, 1952, Acting Secretary of Agriculture Jose S. Camus approved the sale in favor of Carmen Verzo. On September 27, 1952, the office of the Director of Lands notified Carmen Verzo of such approval. Whereupon, on October 13, 1952, Verzo declared the land in her name for taxation purposes, and since then, had been paying the realty taxes thereon. On October 14, 1952, the deed of sale in Verzo's favor was registered, and Transfer Certificate of Title No. T-1055, in lieu of OCT No. 1097, which was cancelled, was issued in her name. On January 26, 1953, petitioner Vda. de Laig, thru counsel, her brother Atty. Dimaano, inquired from the Register of Deeds of Camarines Norte if it was true that OCT No. 1097 in favor of Galero had already been cancelled and a transfer certificate of title had been issued in favor of another person. Respondent Register of Deeds Lapak replied in the affirmative. In no time at all, petitioners called the attention of the Director of Lands to the existence of two deeds of sale, one in favor of Atty. Benito Laig, and another in favor of Carmen Verzo. On February 25, 1953, the Director of Lands requested Petre Galero to explain within 30 days such double sale, and ordered the Provincial Land Officer in Daet, Camarines Norte to investigate the matter and immediately submit findings thereon. On March 12, 1953, in reply to the Director of Land's request, Petre Galero denied having sold the land in issue to Atty. Benito K. Laig. On March 15, 1953, the Bureau of Lands in Camarines Norte reported to the Director of Lands that second vendee Carmen Verzo had already successfully obtained a transfer certificate of title over the land in question, with the recommendation that the heirs of the first vendee, Benito K. Laig, seek their remedy in court as the status of the property at that stage does not anymore fall within the jurisdiction of the Bureau of Lands. Petre Galero was charged in Criminal Case No. 533 before the Court of First Instance of Camarines with estafa thru falsification of public documents in connection with the sale

in favor of Carmen Verzo of the land in point. Galero was convicted on October 29, 1953, which conviction was later affirmed by the Court of Appeals in People vs. Petre Galero (CA-G.R. No. 12043-R, December 2, 1954). On April 13, 1954, petitioner Vda. de Laig, together with her minor children, filed the present action, docketed as Civil Case No. 577 in the Court of First Instance of Camarines Norte against respondents Carmen Verzo, Petre Galero, the Director of Lands, the Register of Deeds of Camarines Norte and the Secretary of Agriculture and Natural Resources praying for the annulment of the sale in favor of Carmen Verzo and the cancellation of the second owner's duplicate of Original Certificate of Title No. 1097 and Transfer Certificate of Title No. T-1055 by declaring the first OCT No. 1097 valid and effective or in the alternative, by ordering Carmen Verzo to reconvey the land in question to petitioners, plus P5,000.00 by way of damages. Sometime in 1958, Galero died while serving his sentence at the National Penitentiary, and was, on November 11, 1958, substituted by his wife, Perpetua Dar, as party defendant (p. 27, ROA; p. 114, rec.). On November 21, 1961, the trial court, in a decision, dismissed the complaint and declared that the land described in TCT No. 1055 to be rightfully owned by Carmen Verzo. The lower court also found Baldomero M. Lapak, then the Register of Deeds of Camarines Norte, guilty of negligence, but exempted him from any liability; found the Director of Lands and the Secretary of Agriculture and Natural Resources likewise guilty of negligence, but exempted them from any liability on the theory that they are not responsible for the acts of their subordinates; held that the approval of two deeds of sale in favor of two different vendees in a space of less than one month is but a ministerial duty which exculpates the Director of Lands and the Secretary of Agriculture and Natural Resources from liability, and that plaintiffs-appellants slept on their rights in not having the first deed of sale in favor of Atty. Laig registered in the Registry of property, and therefore, have only themselves to blame for losing the land; and exempted Galero from liability (pp. 88-97, ROA; pp. 119-124, rec.). On April 12, 1962, petitioners appealed the decision of the lower court to the Court of Appeals. On September 28, 1966 (p. 32, rec.), the Fifth Division of the Court of Appeals, thru Justice Jesus Y. Perez, affirmed the decision of the Court of First Instance of Camarines Norte. The case unveils a couple of issues to resolve, to wit: 1. Who between petitioner Vda. de Laig and respondent Carmen Verzo should be considered as the rightful owner of the land in question; and 2. Should the respondents register of deeds, Director of Lands and the Secretary of Agriculture and Natural Resources, together with respondent Carmen Verzo, be held liable for damages for approving the sale of one and the same piece of land in favor of

two different persons? I As in the present case of Rosario Carbonell vs. Hon. Court of Appeals, et al. (L-29972, Jan. 26, 1976), the first issue calls for the application of Article 1544, paragraph 2, of the New Civil Code regarding double sale. The above-said provision reads: Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith recorded it in the Register of Property (emphasis supplied). In the Carbonell case, supra, WE held that to be under the protective umbrella of paragraph 2, Article 1544, of the New Civil Code, it is essential that the vendee of the immovable must act in good faith in registering his deed of sale. In other words, good faith must characterize the vendee's act of prior registration. To this effect was Our ruling in a 1918 case that The force and effect given by law to an inscription in a public record presupposes the good faith of him who enters such inscription; and rights created by statute, which are predicated upon an inscription in a public registry, do not and cannot accrue under an inscription 'in bad faith,' to the benefit of the person who thus makes the inscription (Leung Yee vs. F.L. Strong Machinery Co. and Williamson, No. 11658, Feb. 15, 1918, 37 Phil. 644, 649). The records reveal that respondent Carmen Verzo was not in good faith when she facilitated the registration of her deed of sale. The following indicia of bad faith characterized NOT ONLY her act of registering her deed of sale, BUT ALSO her purchase of the disputed realty: 1. At the time of the sale of the land in question by Petre Galero to Atty. Benito K. Laig in 1948, the latter was a boarder of Carmen Verzo in her house. As a matter of fact, Atty. Laig maintained his law office, and received his clients (among whom was Petre Galero) therein [p. 81, t.s.n., session of Aug. 23, 1961 ]. Atty. Benito K. Laig, as her boarder, must have mentioned to Carmen Verzo, his landlady, the land sold to him by Galero. By the same token, Carmen Verzo must have known such sale; because transactions of this sort in the rural areas do not escape the knowledge of persons living under one roof with a party to the document, more especially when there exists between such persons and party the peculiarly intimate relationship of landlady and boarder in a small town. 2. One of the witnesses to the deed of sale executed by and between Atty. Laig and Petre Galero was Rosario Verzo Villarente, Carmen Verzo's very own sister who was at that time living with her in her house, where Atty. Laig then boarded.

Rosario Verzo Villarente, being in the household of her sister Carmen Verzo, must have likewise informed the latter about the deed of sale executed by Petre in favor of Atty. Laig which she signed as witness. A formal act, such as witnessing a deed of sale, is not a common daily experience. Laymen, especially rural folk like Rosario Verzo Villarente, who participate in the same, ordinarily regard the same as a memorable event. It is not therefore unreasonable to assume that her significant role as an instrumental witness to the deed of sale between Atty. Laig and Petre Galero must have moved Rosario to confide to her sister Carmen the fact of her participation therein. 3. Petre Galero was able to procure another copy of the duplicate of Original Certificate of Title No. 1097 covering the disputed land through the aid of Atty. Jose Lapak who is the son of the respondent register of deeds, Baldomero Lapak, under clearly dubious circumstances. For one, it was done without observing the required formalities of notice and hearing (Sec. 117, Act No. 496). Secondly, it was an over in a record-setting period of ONLY four [41 days. Add to this the fact that respondent register of deeds Baldomero Lapak issued said duplicate of OCT 1097 despite his having received about eight months earlier and taken note on November 12, 1951 of the letter of petitioner Rosario Vda. de Laig inquiring about the status of the title to the questioned land which was purchased by her husband from Petre Galero; and the process, indeed, reeks with an unpleasant scent. If Atty. Jose Lapak were not the son of respondent Baldomero Lapak, the latter as register of deeds would not have facilitated the issuance of the duplicate copy of the title with such "scandalous haste." He should have informed his son, Atty. Lapak, and Petre Galero about the previous inquiry of petitioner as early as November 5, 1951, to which he replied on November 12, 1951 that OCT No. 1097 was still intact. Moreover, the expeditious disposal of the land in litigation by Petre Galero to Carmen Verzo was done immediately after the death of Atty. Benito Laig, and during the time that his wife Rosario Vda. de Laig, who was residing in faraway Manila, was seeking all legal means to have the title over the property transferred to her name. Such bad faith on the part of respondent Carmen Verzo and Baldomero Lapak is further underscored by the fact that Atty. Jose Lapak himself (a) was the notary public before whom the deed of sale executed by and between Petre Galero and Carmen Verzo was acknowledged, and (b) was the same lawyer who assisted Carmen Verzo in writing the Director of Lands and the Secretary of Agriculture and Natural Resources, enclosing therewith an affidavit also sworn before said Atty. Lapak, praying that the deed of sale be approved. This conspiracy among Petre Galero, register of deeds Baldomero Lapak, his son Atty. Jose Lapak, and Carmen Verzo, could not have been known to petitioner Rosario Vda. de Laig, who was then as now, residing in Manila. 4. Carmen Verzo was familiar with the property in dispute and with the previous legal battle over the same. In fact in her special defense (par. 2, p. 47, ROA), she stated that she gave sums of money to Petre Galero to enable him to institute Civil Case No. 164-R-

14 entitled "Petre Galero vs. Macario Escuta and Florendo Caramoan," for the recovery of said parcel of land. Knowing that said case was for the reconveyance from defendants therein of the land in issue and that Atty. Laig was the counsel of Petre Galero, Carmen Verzo must have known likewise that a torrens title to the same was existing and intact and the same was delivered by Petre to Atty. Laig as the buyer of the land. And if she inquired from the wife of Atty. Laig, which was incumbent upon her as she was aware of the antecedent circumstances, she would have been told by petitioner Rosario Vda. de Laig that the owner's copy of the original certificate of title was then in her possession Respondent Carmen Verzo could not pretend that she believed that said owner's duplicate was lost during the war because Civil Case No. 164-R-14 involving the land in point was instituted only AFTER the war and the owner 's duplicate copy of the title was intact and returned to Petre after he won in 1948 the suit for reconveyance. She could have also asked about said title the first buyer, Florencio Caramoan, who was ordered by the court to reconvey the land and return the owner's duplicate of the to title. 5. Prior to the sale in her favor, Carmen Verzo knew that the disputed property belongs to Atty. Laig, because whenever Atty. Laig was in Manila, Carmen Verzo attended to said property and communicated with Atty. Laig in Manila about his share of the harvest from the land (pp. 33-34, t.s.n., session of Aug. 4, 1964). How can Carmen Verzo speak of Atty. Laig's share of the harvest without first knowing that the land from where the crop was harvested was owned by Atty. Benito Laig? Bad faith can be demonstrated, not ONLY by direct proof, but also by substantial evidence. Bad faith is a state of mind indicated by acts and circumstances and is provable by CIRCUMSTANTIAL ... evidence (Zumwalt v. Utilities Ins. Co., 228 S.W. 2d 750, 754, 360 Mo. 362; Words and Phrases Permanent Ed., Vol. 5, p. 261). Logically, therefore, since, as has already been earlier shown, respondent Carmen Verzo was not a purchaser in good faith, she could never have been a registrant in good faith of the deed of sale of said land in her favor. Consequently, she cannot claim the protection accorded to a registrant in good faith by paragraph 2, Article 1544 of the New Civil Code. Finally, since there is no valid inscription to speak of in the present case, the applicable provision of law is paragraph 3, Article 1544, New Civil Code (Carbonell vs. Hon. Court of Appeals, supra), which states: Should there be no insciption, the ownership shall pertain to the person who in good faith was first in the possession; and, in the ab thereat to the person who presents the oldest title, provided there is good faith (emphasis supplied). In the present case, the fact of Atty. Benito Laig's having been the first possessor in good faith of the property in issue was never disputed by respondent Carmen Verzo.

Moreover, the deed of sale in favor of the late Atty. Benito Laig was executed on June 1, 1948, over 4 years earlier than the deed of sale executed on July 19, 1952 in favor of respondent Carmen Verzo. It is Our view that the offices of the Secretary of Agriculture and Natural Resources and the Director of Lands should be cleared of any liability. It is not difficult to see that the reason why separate approvals concerning two separate sale of the same piece of land were had was the fact that two sets of officials took charge of both requests. But no malice can be gleaned from this fact. It should be borne in mind that both officials daily attend to thousands upon thousands of papers. It is also possible that their assistants failed to notice that two deeds of sale covered the same parcel of land or failed to advise these two officials of such fact. As heretofore indicated, the malicious participation of respondent register of deeds Baldomero Lapak and his son Atty. Lapak is evident. Knowing of the existence in his records of the original of OCT No. 1097, Baldomero Lapak effected the issuance of the second duplicate of OCT No. 1097 to Petre Galero in just four (4) days, dispensing with the requirements of notice and hearing to interested parties. The law in this regard is Section 109 of Act No. 496, which reads: If the duplicate certificate is lost or destroyed, or cannot be produced by a grantee, heir, devisee, assignee, or other person applying for the entry of a new certificate to him ..., a suggestion may be filed by the registered owner or other person in interest and registered. The court (the Court of First Instance acting as land registration court) may thereupon, upon the petition of the registered owner or other person in interest, AFTER NOTICE AND HEARING, direct the issue of a new duplicate certificate, which shall contain a memorandum of the fact that it is issued in place of the lost duplicate certificate, but shall in all respects be entitled to like faith and credit as the original duplicate, and shall thereafter be regarded as the original duplicate for all the purposes of this Act (Ocampo vs. Garcia, L11260, April 29, 1959, 105 Phil. 553). For his malicious involvement, WE find Baldomero Lapak liable under the following provision of the Land Registration Act: Whoever fraudulently procures, or assists in fraudulently procuring or is privy to the fraudulent procurement of any certificate of title or owner's duplicate certificate, shall be fined not exceeding five thousand dollars (ten thousand pesos) or imprisoned not exceeding five years, or both, in the discretion of the court (Sec. 117, Act No. 496). Baldomero Lapak likewise stands liable under Article 27 of the New Civil Code, which states: Any person suffering material or moral loss because a public servant or

employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter, without prejudice to any disciplinary administrative action that may be taken. For in essence, his refusal to follow the directive of law (Act No. 496) was a conduct injurious to the petitioner. Thus a chief of police is liable under Article 27 of the New Civil Code for refusal to give assistance to the complainants which was his official duty as an officer of the law (Amarro, et al. vs. Sumanggit, L-14986, July 31, 1962, 5 SCRA 707, 708-9). Similarly, a municipal mayor incurs the same liability for neglecting to perform his official functions (Javellana vs. Tayo, L-18919, Dec. 29, 1962, 6 SCRA 1042, 1051). WE also find Atty. Jose L. Lapak liable under the abovequoted Section 117 of Act No. 496 (Land Registration Act), for which he should be, not only prosecuted but also, disciplined as a member of the Bar. Moreover, both Baldomero Lapak and his son Atty. Jose Lapak are likewise civilly liable for failure to observe honesty and good faith in the performance of their duties as public officer and as a member of the Bar (Art. 19, New Civil Code) or for wilfully or negligently causing damage to another (Art. 20, New Civil Code), or for wilfully causing loss or injury to another in a manner that is contrary to morals, good customs and/or public policy (Art. 21, New Civil Code). WHEREFORE, THE DECISION APPEALED FROM IS HEREBY REVERSED AND I. THE REGISTER OF DEEDS OF CAMARINES NORTE IS HEREBY DIRECTED (A) TO CANCEL TCT NO. T-1055; AND (B) TO ISSUE IN LIEU THEREOF A NEW TRANSFER CERTIFICATE OF TITLE IN FAVOR OF THE HEIRS OF THE LATE BENITO K. LAIG; AND II. ALL THE RESPONDENTS HEREIN, EXCEPT THE DIRECTOR OF LANDS AND THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, ARE HEREBY ORDERED TO PAY JOINTLY AND SEVERALLY PETITIONERS IN THE AMOUNT OF TEN THOUSAND (P10,000.00) PESOS AS MORAL DAMAGES; THE SUM OF FIVE THOUSAND (P5,000.00) PESOS AS ATTORNEY'S FEES; AND THE COSTS: SO ORDERED. A.C. No. 6210 December 9, 2004

FEDERICO N. RAMOS, complainant, vs. ATTY. PATRICIO A. NGASEO, respondent.

DECISION YNARES-SANTIAGO, J.: This is a complaint for suspension of respondent Atty. Patricio A. Ngaseo for violation of the Code of Professional Responsibility and Article 1491 of the Civil Code by demanding from his client, complainant Federico N. Ramos, the delivery of 1,000 square meters of land, a litigated property, as payment for his appearance fees. The facts as narrated by the complainant are as follows: Sometime in 1998, complainant Federico Ramos went to respondent Atty. Patricio Ngaseo's Makati office to engage his services as counsel in a case1 involving a piece of land in San Carlos, Pangasinan. Respondent agreed to handle the case for an acceptance fee of P20,000.00, appearance fee of P1,000.00 per hearing and the cost of meals, transportation and other incidental expenses. Complainant alleges that he did not promise to pay the respondent 1,000 sq. m. of land as appearance fees.2 On September 16, 1999, complainant went to the respondent's office to inquire about the status of the case. Respondent informed him that the decision was adverse to them because a congressman exerted pressure upon the trial judge. Respondent however assured him that they could still appeal the adverse judgment and asked for the additional amount of P3,850.00 and another P2,000.00 on September 26, 2000 as allowance for research made.3 Although an appeal was filed, complainant however charges the respondent of purposely failing to submit a copy of the summons and copy of the assailed decision. Subsequently, complainant learned that the respondent filed the notice of appeal 3 days after the lapse of the reglementary period. On January 29, 2003, complainant received a demand-letter from the respondent asking for the delivery of the 1,000 sq. m. piece of land which he allegedly promised as payment for respondent's appearance fee. In the same letter, respondent also threatened to file a case in court if the complainant would not confer with him and settle the matter within 30 days. Respondent alleged that sometime in the late 1997, a former client, Federico Ramos and his brother, Dionisio, went to his Makati office to engage his professional services in connection with a 2-hectare parcel of land situated in San Carlos, Pangasinan which the complainant's family lost 7 years earlier through an execution sale in favor of one Alfredo T. Castro. Complainant, who was deaf and could only speak conversational Tagalog haltingly, was assisted by his brother Dionisio. They came all the way from Pangasinan because no lawyer in San Carlos City was willing to handle the case. Complainant, through Dionisio, avers that he has consulted 2 local lawyers but did not

engage their services because they were demanding exorbitant fees. One local lawyer was willing to handle the case for at least one-half of the land involved as his attorney's fee, plus cash expenses, while the other asked for of the land in addition to a large sum of money. Respondent agreed to handle the case for an acceptance fee of P60,000.00 plus an appearance fee of P3,000.00 per hearing. Complainant told him that he would consult his siblings on the matter. Six months later, i.e., in April 1998, complainant, assisted by one Jose Castillo, went to respondent's office to discuss the legal fees. Complainant, through Castillo, told respondent that he was willing to pay an acceptance fee of P40,000.00, P20,000.00 of which shall be paid upon engagement and the remaining P20,000.00 to be paid after their treasure hunt operations in Nueva Viscaya were terminated. Further, complainant offered, in lieu of P3,000.00 per appearance, 1,000 sq. m. of land from the land subject matter of the case, if they win, or from another piece of property, if they lose. In addition, complainant also offered to defray the expenses for transportation, meals and other incidental expenses. Respondent accepted the complainant's offer. Respondent claims that after the trial court dismissed Civil Case No. SCC 2128, he filed a timely notice of appeal and thereafter moved to be discharged as counsel because he had colon cancer. Complainant, now assisted by one Johnny Ramos, implored respondent to continue handling the case, with an offer to double the 1,000 sq. m. piece of land earlier promised and the remaining balance of P20,000.00 acceptance fee. Johnny Ramos made a written commitment and gave respondent's secretary P2,000.00 of the P3,850.00 expenses for the preparation of the appellant's brief. On July 18, 2001, the Court of Appeals rendered a favorable decision ordering the return of the disputed 2-hectare land to the complainant and his siblings. The said decision became final and executory on January 18, 2002. Since then complainant allegedly failed to contact respondent, which compelled him to send a demand letter on January 29, 2003. On February 14, 2003, complainant filed a complaint before the IBP charging his former counsel, respondent Atty. Ngaseo, of violation of the Code of Professional Responsibility for demanding the delivery of 1,000 sq. m. parcel of land which was the subject of litigation. In a report dated July 18, 2003, IBP Commissioner Rebecca Villanueva-Maala found the respondent guilty of grave misconduct and conduct unbecoming of a lawyer in violation of the Code of Professional Responsibility and recommended that he be suspended from the practice of law for 1 year.4 On August 30, 2003, the IBP Board of Governors passed Resolution No. XVI-2003-47 the full text of which reads:5 RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report and Recommendation of the Investigating Commissioner

of the above-entitled case, herein made part of this Resolution/Decision as Annex "A"; and, finding the recommendation fully supported by the evidence on record and the applicable laws and rules, with modification, and considering that respondent have violated the Code of Professional Responsibility for grave misconduct and conduct unbecoming of a lawyer Atty. Patricio A. Ngaseo is hereby SUSPENDED from the practice of law for six (6) months. On December 11, 2003, respondent filed a petition for review assailing IBP Resolution No. XVI-2003-47 for having been issued without or in excess of jurisdiction.6 Respondent argues that he did not violate Article 1491 of the Civil Code because when he demanded the delivery of the 1,000 sq. m. of land which was offered and promised to him in lieu of the appearance fees, the case has been terminated, when the appellate court ordered the return of the 2-hectare parcel of land to the family of the complainant. Respondent further contends that he can collect the unpaid appearance fee even without a written contract on the basis of the principle of quantum meruit. He claims that his acceptance and appearance fees are reasonable because a Makati based legal practitioner, would not handle a case for an acceptance fee of only P20,000.00 and P1,000.00 per court appearance. Under Article 1491(5) of the Civil Code, lawyers are prohibited from acquiring either by purchase or assignment the property or rights involved which are the object of the litigation in which they intervene by virtue of their profession.7 The prohibition on purchase is all embracing to include not only sales to private individuals but also public or judicial sales. The rationale advanced for the prohibition is that public policy disallows the transactions in view of the fiduciary relationship involved, i.e., the relation of trust and confidence and the peculiar control exercised by these persons.8 It is founded on public policy because, by virtue of his office, an attorney may easily take advantage of the credulity and ignorance of his client and unduly enrich himself at the expense of his client.9 However, the said prohibition applies only if the sale or assignment of the property takes place during the pendency of the litigation involving the client's property. Consequently, where the property is acquired after the termination of the case, no violation of paragraph 5, Article 1491 of the Civil Code attaches. Invariably, in all cases where Article 1491 was violated, the illegal transaction was consummated with the actual transfer of the litigated property either by purchase or assignment in favor of the prohibited individual. In Biascan v. Lopez, respondent was found guilty of serious misconduct and suspended for 6 months from the practice of law when he registered a deed of assignment in his favor and caused the transfer of title over the part of the estate despite pendency of Special Proceedings No. 98037 involving the subject property.10 In the consolidated administrative cases of Valencia v. Cabanting,11 the Court suspended respondent Atty. Arsenio Fer Cabanting for six (6) months from the practice of law when he purchased his client's property which was still the subject of a pending certiorari proceeding.

In the instant case, there was no actual acquisition of the property in litigation since the respondent only made a written demand for its delivery which the complainant refused to comply. Mere demand for delivery of the litigated property does not cause the transfer of ownership, hence, not a prohibited transaction within the contemplation of Article 1491. Even assuming arguendo that such demand for delivery is unethical, respondent's act does not fall within the purview of Article 1491. The letter of demand dated January 29, 2003 was made long after the judgment in Civil Case No. SCC-2128 became final and executory on January 18, 2002. We note that the report of the IBP Commissioner, as adopted by the IBP Board of Governors in its Resolution No. XVI-2003-47, does not clearly specify which acts of the respondent constitute gross misconduct or what provisions of the Code of Professional Responsibility have been violated. We find the recommended penalty of suspension for 6 months too harsh and not proportionate to the offense committed by the respondent. The power to disbar or suspend must be exercised with great caution. Only in a clear case of misconduct that seriously affects the standing and character of the lawyer as an officer of the Court and member of the bar will disbarment or suspension be imposed as a penalty.12 All considered, a reprimand is deemed sufficient and reasonable. WHEREFORE, in view of the foregoing, respondent Atty. Patricio A. Ngaseo is found guilty of conduct unbecoming a member of the legal profession in violation of Rule 20.04 of Canon 20 of the Code of Professional Responsibility. He is REPRIMANDED with a warning that repetition of the same act will be dealt with more severely. SO ORDERED. B.M. No. 793 July 30, 2004

IN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE TERRITORY OF GUAM OF ATTY. LEON G. MAQUERA. RESOLUTION TINGA, J.: May a member of the Philippine Bar who was disbarred or suspended from the practice of law in a foreign jurisdiction where he has also been admitted as an attorney be meted the same sanction as a member of the Philippine Bar for the same infraction committed in the foreign jurisdiction? There is a Rule of Court provision covering this case's central issue. Up to this juncture, its reach and breadth have not undergone the test of an unsettled case. In a Letter dated August 20, 1996,1 the District Court of Guam informed this Court of

the suspension of Atty. Leon G. Maquera (Maquera) from the practice of law in Guam for two (2) years pursuant to the Decision rendered by the Superior Court of Guam on May 7, 1996 in Special Proceedings Case No. SP0075-94,2 a disciplinary case filed by the Guam Bar Ethics Committee against Maquera. The Court referred the matter of Maquera's suspension in Guam to the Bar Confidant for comment in its Resolution dated November 19, 1996.3 Under Section 27, Rule 138 of the Revised Rules of Court, the disbarment or suspension of a member of the Philippine Bar in a foreign jurisdiction, where he has also been admitted as an attorney, is also a ground for his disbarment or suspension in this realm, provided the foreign court's action is by reason of an act or omission constituting deceit, malpractice or other gross misconduct, grossly immoral conduct, or a violation of the lawyer's oath. In a Memorandum dated February 20, 1997, then Bar Confidant Atty. Erlinda C. Verzosa recommended that the Court obtain copies of the record of Maquera's case since the documents transmitted by the Guam District Court do not contain the factual and legal bases for Maquera's suspension and are thus insufficient to enable her to determine whether Maquera's acts or omissions which resulted in his suspension in Guam are likewise violative of his oath as a member of the Philippine Bar.4 Pursuant to this Court's directive in its Resolution dated March 18, 1997,5 the Bar Confidant sent a letter dated November 13, 1997 to the District Court of Guam requesting for certified copies of the record of the disciplinary case against Maquera and of the rules violated by him.6 The Court received certified copies of the record of Maquera's case from the District Court of Guam on December 8, 1997.7 Thereafter, Maquera's case was referred by the Court to the Integrated Bar of the Philippines (IBP) for investigation report and recommendation within sixty (60) days from the IBP's receipt of the case records.8 The IBP sent Maquera a Notice of Hearing requiring him to appear before the IBP's Commission on Bar Discipline on July 28, 1998.9 However, the notice was returned unserved because Maquera had already moved from his last known address in Agana, Guam and did not leave any forwarding address.10 On October 9, 2003, the IBP submitted to the Court its Report and Recommendation and its Resolution No. XVI-2003-110, indefinitely suspending Maquera from the practice of law within the Philippines until and unless he updates and pays his IBP membership dues in full.11 The IBP found that Maquera was admitted to the Philippine Bar on February 28, 1958. On October 18, 1974, he was admitted to the practice of law in the territory of Guam. He was suspended from the practice of law in Guam for misconduct, as he acquired his client's property as payment for his legal services, then sold it and as a consequence obtained an unreasonably high fee for handling his client's case.12

In its Decision, the Superior Court of Guam stated that on August 6, 1987, Edward Benavente, the creditor of a certain Castro, obtained a judgment against Castro in a civil case. Maquera served as Castro's counsel in said case. Castro's property subject of the case, a parcel of land, was to be sold at a public auction in satisfaction of his obligation to Benavente. Castro, however, retained the right of redemption over the property for one year. The right of redemption could be exercised by paying the amount of the judgment debt within the aforesaid period.13 At the auction sale, Benavente purchased Castro's property for Five Hundred U.S. Dollars (US$500.00), the amount which Castro was adjudged to pay him.14 On December 21, 1987, Castro, in consideration of Maquera's legal services in the civil case involving Benavente, entered into an oral agreement with Maquera and assigned his right of redemption in favor of the latter.15 On January 8, 1988, Maquera exercised Castro's right of redemption by paying Benavente US$525.00 in satisfaction of the judgment debt. Thereafter, Maquera had the title to the property transferred in his name.16 On December 31, 1988, Maquera sold the property to C.S. Chang and C.C. Chang for Three Hundred Twenty Thousand U.S. Dollars (US$320,000.00).17 On January 15, 1994, the Guam Bar Ethics Committee (Committee) conducted hearings regarding Maquera's alleged misconduct.18 Subsequently, the Committee filed a Petition in the Superior Court of Guam praying that Maquera be sanctioned for violations of Rules 1.519 and 1.8(a)20 of the Model Rules of Professional Conduct (Model Rules) in force in Guam. In its Petition, the Committee claimed that Maquera obtained an unreasonably high fee for his services. The Committee further alleged that Maquera himself admitted his failure to comply with the requirement in Rule 1.8 (a) of the Model Rules that a lawyer shall not enter into a business transaction with a client or knowingly acquire a pecuniary interest adverse to a client unless the transaction and the terms governing the lawyer's acquisition of such interest are fair and reasonable to the client, and are fully disclosed to, and understood by the client and reduced in writing.21 The Committee recommended that Maquera be: (1) suspended from the practice of law in Guam for a period of two 2 years, however, with all but thirty (30) days of the period of suspension deferred; (2) ordered to return to Castro the difference between the sale price of the property to the Changs and the amount due him for legal services rendered to Castro; (3) required to pay the costs of the disciplinary proceedings; and (4) publicly reprimanded. It also recommended that other jurisdictions be informed that Maquera has been subject to disciplinary action by the Superior Court of Guam.22 Maquera did not deny that Castro executed a quitclaim deed to the property in his favor as compensation for past legal services and that the transaction, except for the deed

itself, was oral and was not made pursuant to a prior written agreement. However, he contended that the transaction was made three days following the alleged termination of the attorney-client relationship between them, and that the property did not constitute an exorbitant fee for his legal services to Castro.23 On May 7, 1996, the Superior Court of Guam rendered its Decision24 suspending Maquera from the practice of law in Guam for a period of two (2) years and ordering him to take the Multi-State Professional Responsibility Examination (MPRE) within that period. The court found that the attorney-client relationship between Maquera and Castro was not yet completely terminated when they entered into the oral agreement to transfer Castro's right of redemption to Maquera on December 21, 1987. It also held that Maquera profited too much from the eventual transfer of Castro's property to him since he was able to sell the same to the Changs with more than US$200,000.00 in profit, whereas his legal fees for services rendered to Castro amounted only to US$45,000.00. The court also ordered him to take the MPRE upon his admission during the hearings of his case that he was aware of the requirements of the Model Rules regarding business transactions between an attorney and his client "in a very general sort of way."25 On the basis of the Decision of the Superior Court of Guam, the IBP concluded that although the said court found Maquera liable for misconduct, "there is no evidence to establish that [Maquera] committed a breach of ethics in the Philippines."26 However, the IBP still resolved to suspend him indefinitely for his failure to pay his annual dues as a member of the IBP since 1977, which failure is, in turn, a ground for removal of the name of the delinquent member from the Roll of Attorneys under Section 10, Rule 139A of the Revised Rules of Court.27 The power of the Court to disbar or suspend a lawyer for acts or omissions committed in a foreign jurisdiction is found in Section 27, Rule 138 of the Revised Rules of Court, as amended by Supreme Court Resolution dated February 13, 1992, which states: Section 27. Disbarment or suspension of attorneys by Supreme Court, grounds therefor. A member of the bar may be disbarred or suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his conviction of a crime involving moral turpitude, or for any violation of the oath which he is required to take before admission to practice, or for a willful disobedience appearing as attorney for a party to a case without authority to do so. The practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or brokers, constitutes malpractice. The disbarment or suspension of a member of the Philippine Bar by a competent court or other disciplinatory agency in a foreign jurisdiction where he has also been admitted as an attorney is a ground for his disbarment or suspension if the basis of such action includes any of the acts hereinabove enumerated.

The judgment, resolution or order of the foreign court or disciplinary agency shall be prima facie evidence of the ground for disbarment or suspension (Emphasis supplied). The Court must therefore determine whether Maquera's acts, namely: acquiring by assignment Castro's right of redemption over the property subject of the civil case where Maquera appeared as counsel for him; exercising the right of redemption; and, subsequently selling the property for a huge profit, violate Philippine law or the standards of ethical behavior for members of the Philippine Bar and thus constitute grounds for his suspension or disbarment in this jurisdiction. The Superior Court of Guam found that Maquera acquired his client's property by exercising the right of redemption previously assigned to him by the client in payment of his legal services. Such transaction falls squarely under Article 1492 in relation to Article 1491, paragraph 5 of the Civil Code of the Philippines. Paragraph 5 of Article 149128 prohibits the lawyer's acquisition by assignment of the client's property which is the subject of the litigation handled by the lawyer. Under Article 1492,29 the prohibition extends to sales in legal redemption. The prohibition ordained in paragraph 5 of Article 1491 and Article 1492 is founded on public policy because, by virtue of his office, an attorney may easily take advantage of the credulity and ignorance of his client30 and unduly enrich himself at the expense of his client. The case of In re: Ruste31 illustrates the significance of the aforementioned prohibition. In that case, the attorney acquired his clients' property subject of a case where he was acting as counsel pursuant to a deed of sale executed by his clients in his favor. He contended that the sale was made at the instance of his clients because they had no money to pay him for his services. The Court ruled that the lawyer's acquisition of the property of his clients under the circumstances obtaining therein rendered him liable for malpractice. The Court held: Whether the deed of sale in question was executed at the instance of the spouses driven by financial necessity, as contended by the respondent, or at the latter's behest, as contended by the complainant, is of no moment. In either case an attorney occupies a vantage position to press upon or dictate his terms to a harassed client, in breach of the "rule so amply protective of the confidential relations, which must necessarily exist between attorney and client, and of the rights of both".32 The Superior Court of Guam also hinted that Maquera's acquisition of Castro's right of redemption, his subsequent exercise of said right, and his act of selling the redeemed property for huge profits were tainted with deceit and bad faith when it concluded that Maquera charged Castro an exorbitant fee for his legal services. The court held that since the assignment of the right of redemption to Maquera was in payment for his legal

services, and since the property redeemed by him had a market value of US$248,220.00 as of December 21, 1987 (the date when the right of redemption was assigned to him), he is liable for misconduct for accepting payment for his legal services way beyond his actual fees which amounted only to US$45,000.00. Maquera's acts in Guam which resulted in his two (2)-year suspension from the practice of law in that jurisdiction are also valid grounds for his suspension from the practice of law in the Philippines. Such acts are violative of a lawyer's sworn duty to act with fidelity toward his clients. They are also violative of the Code of Professional Responsibility, specifically, Canon 17 which states that "[a] lawyer owes fidelity to the cause of his client and shall be mindful the trust and confidence reposed in him;" and Rule 1.01 which prohibits lawyers from engaging in unlawful, dishonest, immoral or deceitful conduct. The requirement of good moral character is not only a condition precedent to admission to the Philippine Bar but is also a continuing requirement to maintain one's good's standing in the legal profession.33 It bears stressing that the Guam Superior Court's judgment ordering Maquera's suspension from the practice of law in Guam does not automatically result in his suspension or disbarment in the Philippines. Under Section 27,34 Rule 138 of the Revised Rules of Court, the acts which led to his suspension in Guam are mere grounds for disbarment or suspension in this jurisdiction, at that only if the basis of the foreign court's action includes any of the grounds for disbarment or suspension in this jurisdiction.35 Likewise, the judgment of the Superior Court of Guam only constitutes prima facie evidence of Maquera's unethical acts as a lawyer.36 More fundamentally, due process demands that he be given the opportunity to defend himself and to present testimonial and documentary evidence on the matter in an investigation to be conducted in accordance with Rule 139-B of the Revised Rules of Court. Said rule mandates that a respondent lawyer must in all cases be notified of the charges against him. It is only after reasonable notice and failure on the part of the respondent lawyer to appear during the scheduled investigation that an investigation may be conducted ex parte.37 The Court notes that Maquera has not yet been able to adduce evidence on his behalf regarding the charges of unethical behavior in Guam against him, as it is not certain that he did receive the Notice of Hearing earlier sent by the IBP's Commission on Bar Discipline. Thus, there is a need to ascertain Maquera's current and correct address in Guam in order that another notice, this time specifically informing him of the charges against him and requiring him to explain why he should not be suspended or disbarred on those grounds (through this Resolution), may be sent to him. Nevertheless, the Court agrees with the IBP that Maquera should be suspended from the practice of law for non-payment of his IBP membership dues from 1977 up to the present.38 Under Section 10, Rule 139-A of the Revised Rules of Court, non-payment of membership dues for six (6) months shall warrant suspension of membership in the IBP, and default in such payment for one year shall be ground for removal of the name of the

delinquent member from the Roll of Attorneys.39 WHEREFORE, Atty. Leon G. Maquera is required to SHOW CAUSE, within fifteen (15) days from receipt of this Resolution, why he should not be suspended or disbarred for his acts which gave rise to the disciplinary proceedings against him in the Superior Court of Guam and his subsequent suspension in said jurisdiction. The Bar Confidant is directed to locate the current and correct address of Atty. Maquera in Guam and to serve upon him a copy of this Resolution. In the meantime, Atty. Maquera is SUSPENDED from the practice of law for ONE (1) YEAR or until he shall have paid his membership dues, whichever comes later. Let a copy of this Resolution be attached to Atty. Maquera's personal record in the Office of the Bar Confidant and copies be furnished to all chapters of the Integrated Bar of the Philippines and to all courts in the land. SO ORDERED. A.M. No. 2430 August 30, 1990 MAURO P. MANANQUIL, complainant, vs. ATTY. CRISOSTOMO C. VILLEGAS, respondent. Geminiano M. Eleccion for complainant. R E S O LUTIO N CORTES, J.: In a verified complaint for disbarment dated July 5, 1982, Mauro P. Mananquil charged respondent Atty. Crisostomo C. Villegas with gross misconduct or malpractice committed while acting as counsel of record of one Felix Leong in the latter's capacity as administrator of the Testate Estate of the late Felomina Zerna in Special Proceedings No. 460 before then Court of First Instance of Negros Occidental. The complainant was appointed special administrator after Felix Leong died. In compliance with a resolution of this Court, respondent filed his comment to the complaint on January 20, 1983. After complainant filed his reply, the Court resolved to refer the case to the Solicitor General for investigation, report and recommendation. In a hearing conducted on May 15, 1985 by the investigating officer assigned to the case, counsel for the complainant proposed that the case be considered on the basis of position papers and memoranda to be submitted by the parties. Respondent agreed. Thus, the investigating officer required the parties to submit their respective position papers and memoranda, with the understanding that with or without the memoranda, the case will be deemed submitted for resolution after the expiration of 30 days. In

compliance, both parties submitted their respective position papers; but no memorandum was filed by either party. Thereafter, the case was deemed submitted. In the pleadings submitted before the Court and the Office of the Solicitor General, complainant alleges that over a period of 20 years, respondent allowed lease contracts to be executed between his client Felix Leong and a partnership HIJOS DE JOSE VILLEGAS, of which respondent is one of the partners, covering several parcels of land of the estate, i.e. Lots Nos. 1124, 1228, 2221, 2402, 3939, 3942 and 3957 of the Tanjay Cadastre, under iniquitous terms and conditions. Moreover, complainant charges that these contracts were made without the approval of the probate court and in violation of Articles 1491 and 1646 of the new Civil Code. On the basis of the pleadings submitted by the parties, and other pertinent records of the investigation, the Solicitor General submitted his report dated February 21, 1990, finding that respondent committed a breach in the performance of his duties as counsel of administrator Felix Leong when he allowed the renewal of contracts of lease for properties involved in the testate proceedings to be undertaken in favor of HIJOS DE JOSE VILLEGAS without notifying and securing the approval of the probate court. However, the Solicitor General opined that there was no sufficient evidence to warrant a finding that respondent had allowed the properties to be leased in favor of his family partnership at a very low rental or in violation of Articles 1491 and 1646 of the new Civil Code. Thus, the Solicitor General recommended that respondent be suspended from the practice of law for a period of THREE (3) months with a warning that future misconduct on respondent's part will be more severely dealt with [Report and Recommendation of the Solicitor General, pp. 1-10; Rollo, pp. 37-46. Also, Complaint of the Solicitor General, pp. 1-3; Rollo, pp. 47-49]. As gleaned from the record of the case and the report and recommendation of the Solicitor General, the following facts are uncontroverted: That as early as March 21, 1961, respondent was retained as counsel of record for Felix Leong, one of the heirs of the late Felomina Zerna, who was appointed as administrator of the Testate Estate of the Felomina Zerna in Special No. 460 on May 22, 1961; That, a lease contract dated August 13, 1963 was executed between Felix Leong and the "Heirs of Jose Villegas" represented by respondent's brotherin-law Marcelo Pastrano involving, among others, sugar lands of the estate designated as Lot Nos. 1124, 1228, 2221, 2402, 3939, 3942 and 3957 of the Tanjay Cadastre; That Felix Leong was designated therein as administrator and "owner, by testamentary disposition, of 5/6 of all said parcels of land"; That, the lifetime of the lease contract was FOUR (4) sugar crop years, with a yearly rental of TEN PERCENT (10%) of the value of the sugar produced

from the leased parcels of land; That, on April 20, 1965, the formal partnership of HIJOS DE JOSE VILLEGAS was formed amongst the heirs of Jose Villegas, of which respondent was a member; That, on October 18, 1965, another lease contract was executed between Felix Leong and the partnership HIJOS DE JOSE VILLEGAS, containing basically the same terms and conditions as the first contract, with Marcelo Pastrano signing once again as representative of the lessee; That, on March 14, 1968, after the demise of Marcelo Pastrano, respondent was appointed manager of HIJOS DE JOSE VILLEGAS by the majority of partners; That, renewals of the lease contract were executed between Felix Leong and HIJOS DE JOSE VILLEGAS on January 13, 1975 and on December 4, 1978, with respondent signing therein as representative of the lessee; and, That, in the later part of 1980, respondent was replaced by his nephew Geronimo H. Villegas as manager of the family partnership. Under the above circumstances, the Court finds absolutely no merit to complainant's charge, and the Solicitor General's finding, that respondent committed acts of misconduct in failing to secure the approval of the court in Special Proceedings No. 460 to the various lease contracts executed between Felix Leong and respondent's family partnership. Pursuant to Section 3 of Rule 84 of the Revised Rules of Court, a judicial executor or administrator has the right to the possession and management of the real as well as the personal estate of the deceased so long as it is necessary for the payment of the debts and the expenses of administration. He may, therefore, exercise acts of administration without special authority from the court having jurisdiction of the estate. For instance, it has long been settled that an administrator has the power to enter into lease contracts involving the properties of the estate even without prior judicial authority and approval [See Ferraris v. Rodas, 65 Phil. 732 (1938); Jocson de Hilado v. Nava, 69 Phil. 1 (1939); San Diego, Sr. v. Hombre, G.R No. L-19265, May 29, 1964, 11 SCRA 165]. Thus, considering that administrator Felix Leong was not required under the law and prevailing jurisprudence to seek prior authority from the probate court in order to validly lease real properties of the estate, respondent, as counsel of Felix Leong, cannot be taken to task for failing to notify the probate court of the various lease contracts involved herein and to secure its judicial approval thereto. Nevertheless, contrary to the opinion of the Solicitor General, the Court finds sufficient evidence to hold respondent subject to disciplinary sanction for having, as counsel of record for the administrator in Special Proceedings No. 460, participated in the

execution in 1975 and 1978 of renewals of the lease agreement involving properties of the estate in favor of the partnership HIJOS DE JOSE VILLEGAS, of which respondent is a member and in 1968 was appointed managing partner. By virtue of Article 1646 of the new Civil Code, the persons referred to in Article 1491 are prohibited from leasing, either in person or through the mediation of another, the properties or things mentioned in that article, to wit: xxx xxx xxx (1) The guardian, the property of the person or persons who may be under his guardianship; (2) Agents, the property whose administration or sale may have been intrusted to them, unless the consent of the principal have been given; (3) Executors and administrators, the property of the estate under administration (4) Public officers and employees, the property of the State or of any subdivision thereof, or of any government owned or controlled corporation, or institution, the administration of which has been intrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the sale; (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property or rights in litigation or levied upon on execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession. (6) Any others specially disqualified by law xxx xxx xxx [Article 1491 of the new Civil Code; Emphasis supplied.] The above disqualification imposed on public and judicial officers and lawyers is grounded on public policy considerations which disallow the transactions entered into by them, whether directly or indirectly, in view of the fiduciary relationship involved, or the peculiar control exercised by these individuals over the properties or rights covered [See Rubias v. Batiller, G.R. No. L-35702, May 29, 1973, 51 SCRA 120; Maharlika Publishing Corporation v. Tagle, G.R. No. 65594, July 9, 1986, 142 SCRA 553; Fornilda v. The Branch 164, RTC Fourth Judicial Region, Pasig, G.R. No. 72306, October 5, 1988, 166 SCRA 281 and January 24, 1989, 169 SCRA 351].

Thus, even if the parties designated as lessees in the assailed lease contracts were the "Heirs of Jose Villegas" and the partnership HIJOS DE JOSE VILLEGAS, and respondent signed merely as an agent of the latter, the Court rules that the lease contracts are covered by the prohibition against any acquisition or lease by a lawyer of properties involved in litigation in which he takes part. To rule otherwise would be to lend a stamp of judicial approval on an arrangement which, in effect, circumvents that which is directly prohibited by law. For, piercing through the legal fiction of separate juridical personality, the Court cannot ignore the obvious implication that respondent as one of the heirs of Jose Villegas and partner, later manager of, in HIJOS DE JOSE VILLEGAS stands to benefit from the contractual relationship created between his client Felix Leong and his family partnership over properties involved in the ongoing testate proceedings. In his defense, respondent claims that he was neither aware of, nor participated in, the execution of the original lease contract entered into between his client and his family partnership, which was then represented by his brother-in-law Marcelo Pastrano. And although he admits that he participated in the execution of subsequent renewals of the lease contract as managing partner of HIJOS DE JOSE VILLEGAS, he argues that he acted in good faith considering that the heirs of Filomena Zerna consented or acquiesced to the terms and conditions stipulated in the original lease contract. He further contends that pursuant to the ruling of the Court in Tuason v. Tuason [88 Phil. 428 (1951)] the renewal contracts do not fall within the prohibition of Articles 1491 and 1646 since he signed the same as a mere agent of the partnership. Respondent's contentions do not provide sufficient basis to escape disciplinary action from this Court. It taxes this Courts imagination that respondent disclaims any knowledge in the execution of the original lease contract between his client and his family partnership represented by his brother-in-law. Be that as it may, it cannot be denied that respondent himself had knowledge of and allowed the subsequent renewals of the lease contract. In fact, he actively participated in the lease contracts dated January 13, 1975 and December 4, 1978 by signing on behalf of the lessee HIJOS DE JOSE VILLEGAS. Moreover, the claim that the heirs of Filomena Zerna have acquiesced and consented to the assailed lease contracts does not militate against respondent's liability under the rules of professional ethics. The prohibition referred to in Articles 1491 and 1646 of the new Civil Code, as far as lawyers are concerned, is intended to curtail any undue influence of the lawyer upon his client on account of his fiduciary and confidential association [Sotto v. Samson, G.R. No. L-16917, July 31, 1962, 5 SCRA 733]. Thus, the law makes the prohibition absolute and permanent [Rubias v. Batiller, supra]. And in view of Canon 1 of the new Code of Professional Responsibility and Sections 3 & 27 of Rule 138 of the Revised Rules of Court, whereby lawyers are duty-bound to obey and uphold the laws of the land, participation in the execution of the prohibited contracts such as those referred to in Articles 1491 and 1646 of the new Civil Code has been held to constitute breach of

professional ethics on the part of the lawyer for which disciplinary action may be brought against him [See Bautista v. Gonzalez, Adm. Matter No. 1625, February 12, 1990). Accordingly, the Court must reiterate the rule that the claim of good faith is no defense to a lawyer who has failed to adhere faithfully to the legal disqualifications imposed upon him, designed to protect the interests of his client [See In re Ruste, 70 Phil. 243 (1940); Also, Severino v. Severino, 44 Phil. 343 (1923)]. Neither is there merit in respondent's reliance on the case of Tuason v. Tuason [supra.] It cannot be inferred from the statements made by the Court in that case that contracts of sale or lease where the vendee or lessee is a partnership, of which a lawyer is a member, over a property involved in a litigation in which he takes part by virtue of his profession, are not covered by the prohibition under Articles 1491 and 1646. However, the Court sustains the Solicitor General's holding that there is no sufficient evidence on record to warrant a finding that respondent allowed the properties of the estate of Filomena Zerna involved herein to be leased to his family partnership at very low rental payments. At any rate, it is a matter for the court presiding over Special Proceedings No. 460 to determine whether or not the agreed rental payments made by respondent's family partnership is reasonable compensation for the use and occupancy of the estate properties. Considering thus the nature of the acts of misconduct committed by respondent, and the facts and circumstances of the case, the Court finds sufficient grounds to suspend respondent from the practice of law for a period of three (3) months. WHEREFORE, finding that respondent Atty. Crisostomo C. Villegas committed acts of gross misconduct, the Court Resolved to SUSPEND respondent from the practice of law for four (4) months effective from the date of his receipt of this Resolution, with a warning that future misconduct on respondent's part will be more severely dealt with. Let copies of this Resolution be circulated to all courts of the country for their information and guidance, and spread in the personal record of Atty. Villegas. SO ORDERED. G.R. No. 72306 October 6, 1988 DAVID P. FORNILDA, JUAN P. FORNILDA, EMILIA P. FORNILDA OLILI, LEOCADIA P. FORNILDA LABAYEN and ANGELA P. FORNILDA GUTIERREZ, petitioners, vs. THE BRANCH 164, REGIONAL TRIAL COURT IVTH JUDICIAL REGION, PASIG, JOAQUIN C. ANTONIO Deputy Sheriff, RTC, 4JR Tanay, Rizal and ATTY. SERGIO I. AMONOY respondents. Irene C. Ishiwata for petitioner A. Gutierrez.

Sergio L Amonoy for and in his own behalf. MELENCIO-HERRERA, J.: The Petition entitled "Petisiyung Makapagpasuri Taglay ang Pagpapapigil ng Utos", translated as one for certiorari with Preliminary Injunction, was filed on 27 September 1985 by three (3) petitioners, namely David P. Fornilda, Emilia P. Fornilda-Olili and Angela P. Fornilda-Gutierrez. They seek the reversal of the Order of respondent Trial Court, dated 25 July 1985, granting a Writ of Possession, as well as its Orders, dated 25 April 1986 and 16 May 1986 (p. 241, Rollo), directing and authorizing respondent Sheriff to demolish the houses of petitioners Angela and Leocadia Fornilda (who is listed as a petitioner but who did not sign the Petition). Neither is Juan P. Fornilda a signatory. The facts disclose that the deceased, Julio M. Catolos formerly owned six (6) parcels of land located in Tanay, Rizal, which are the controverted properties in the present litigation. His estate was the subject of settlement in Special Proceedings No. 3103 of the then Court of First Instance of Rizal, at Pasig, Branch 1. Francesca Catolos Agnes Catolos Alfonso I. ForniIda and Asuncion M. Pasamba were some of the legal heirs and were represented in the case by Atty. Sergio Amonoy (hereinafter referred to as Respondent Amonoy). A Project of Partition was filed in the Intestate Court whereby the Controverted Parcels were adjudicated to Alfonso I. Fornilda and Asuncion M. Pasamba. On 12 January 1965, the Court approved the Project of Partition. It was not until 6 August 1969, however, that the estate was declared closed and terminated after estate and inheritance taxes had been paid, the claims against the estate settled and all properties adjudicated. Eight (8) days thereafter, or on 20 January 1965, Alfonso 1. Fornilda and Asuncion M. Pasamba executed a Contract of Mortgage wherein they mortgaged the Controverted Parcels to Respondent Amonoy as security for the payment of his attorney's fees for services rendered in the aforementioned intestate proceedings, in the amount of P27,600.00 (Annex "A", Comment). Asuncion M. Pasamba died on 24 February 1969 while Alfonso 1. Fornilda passed away on 2 July 1969. Petitioners are some of the heirs of Alfonso I. Fornilda. Since the mortgage indebtedness was not paid, on 21 January 1970, Respondent Amonoy instituted foreclosure proceedings before the Court of First Instance of Rizal, at Pasig, Branch VIII entitled "Sergio I. Amonoy vs. Heirs of Asuncion M. Pasamba and Heirs of Alfonso 1. Fornilda" [Civil Case No. 12726] (Annex "B", Ibid.). Petitioners, as defendants therein, alleged that the amount agreed upon as attorney's fees was only Pll,695.92 and that the sum of P27,600.00 was unconscionable and unreasonable. Appearing as signatory counsel for Respondent Amonoy was Atty. Jose S. Balajadia.

On 28 September 1972, the Trial Court 1 rendered judgement in the Foreclosure Case ordering the Pasamba and Fornilda heirs to pay Respondent Amonoy, within ninety (90).days from receipt of the decision, the sums of P27,600.00 representing the attorney's fees secured by the mortgage; Pl l,880.00 as the value of the harvest from two (2) parcels of land; and 25% of the total of the two amounts, or P9,645.00, as attorney's fees, failing which the Controverted Parcels would be sold at public auction (Annex "C", Ibid.). On 6 February 1973, the Controverted Parcels were foreclosed and on 23 March 1973, an auction sale was held with Respondent Amonoy as the sole bidder for P23,760.00 (Annex "D", Ibid.). Said sale was confirmed by the Trial Court on 2 May 1973 (Annex "E", Ibid.). To satisfy the deficiency, another execution sale was conducted with Respondent Amonoy as the sole bidder for P12,137.50. On the basis of an Affidavit of Consolidation of Ownership by Respondent Amonoy, the corresponding tax declarations covering the Controverted Parcels were consolidated in his name. On 19 December 1973, or a year after the judgment in the Foreclosure Case, an action for Annulment of Judgment entitled "Maria Penano et al. vs. Sergio Amonoy, et al." (Civil Case No. 18731) was filed before the then Court of First Instance of Rizal, at Pasig the Annulment Case (Annex "F", Ibid.) Petitioners were also included as plaintiffs. Appearing for the plaintiffs in that case was Atty. Jose F. Tiburcio. Squarely put in issue were the propriety of the mortgage, the validity of the judgment in the Foreclosure Case, and the tenability of the acquisitions by Respondent Amonoy at the Sheriffs sale. Of particular relevance to the instant Petition is the contention that the mortgage and the Sheriffs sales were null and void as contrary to the positive statutory injunction in Article 1491 (5) of the Civil Code, which prohibits attorneys from purchasing, even at a public or judicial auction, properties and rights in litigation, and that the Trial Court, in the Foreclosure Case, had never acquired jurisdiction over the subject matter of the action, i.e., the Controverted Parcels. On 7 November 1977, the Trial Court 2 dismissed the Annulment Case holding that the particular disqualification in Article 1491 of the Civil Code is not of general application nor of universal effect but must be reconciled with the rule that permits judgment creditors to be bidders at sheriffs sales, so that Respondent Amonoy was "clearly not prohibited from bidding his judgment and his acquisitions therefore are sanctioned by law" (Annex "G", Ibid.). On 22 July 1981, the Court of Appeals (in CA-G.R. No. 63214-R) (the Appealed Case) 3 affirmed the aforesaid judgment predicated on three principal grounds: (1) that no legal impediment exists to bar an heir from encumbering his share of the estate after a project of partition has been approved, that act being a valid exercise of his right of ownership; (2) res judicata, since petitioners never questioned the capacity of Respondent Amonoy to acquire the property in the Foreclosure Case; and (3) the complaint in the Annulment

Case did not allege extrinsic fraud nor collusion in obtaining the judgment so that the action must fail. Upon remand of the Foreclusure Case to respondent Regional Trial Court, Branch 164, at Pasig, Respondent Sheriff, on 26 August 1985, notified petitioners to vacate the premises (p. 17, Rollo), subject of the Writ of Possession issued on 25 July 1985 (p. 18, Rollo). On 27 September 1985, petitioners came to this Court in a pleading entitled "Petisiyung Makapagpasuri Taglay ang Pagpapapigil ng Utos". On 11 November 1985, we dismissed the petition for non-payment of docket and other fees. However, upon payment thereof, the Order of dismissal was set aside and respondents were directed to submit their Comment. In his Comment, Respondent Amonoy denies that he had acquired the Controverted Parcels through immoral and illegal means contending that "the question of attorney's fees, the mortgage to secure the same, the sale of the mortgaged properties at public auction, which was confirmed by the Court, and ultimately, the ownership and possession over them, have all been judicially adjudicated (p. 146, Rollo) We gave due course to the petition and required the filing of the parties' respective memoranda. Meanwhile, on motion of Respondent Amonoy, dated 24 April 1986, respondent Trial Court, in the Foreclosure Case, issued Orders dated 25 April and 16 May 1986 authorizing the demolition of the houses and other structures of petitioners Leocadia and Angela Fornilda (p. 241, Rollo). On 1 June 1986 the house of Angela Fornilda was totally demolished while that of Leocadia was spared due to the latter's assurance that she would seek postponement. On 1 June 1986, in a pleading entitled "Mahigpit na Musiyung Para Papanagutin Kaugnay ng Paglalapastangan", followed by a Musiyung Makahingi ng Utos sa Pagpapapigil ng Pagpapagiba at Papanagutin sa Paglalapastangan' petitioners applied for a Restraining Order, which we granted on 2 June 1986, enjoining respondents and the Sheriff of Rizal from demolishing petitioners' houses (p. 221, Rollo). In a pleading entitled 'Mahigpit na Musiyung para Papanagutin Kaugnay ng Paglapastangan' and 'Masasamang Gawain (Mal-Practices)' and 'Paninindigan (Memorandum)' both filed on 16 June 1988, petitioners likewise charged Respondent Amonoy with malpractice and prayed for his disbarment (pp. 224; 226, Rollo). In Respondent Amonoy's "Comment and Manifestations" filed on 30 June 1986, he indicated that the Restraining Order received by the Deputy Sheriff of Rizal only on 6 June 1986 had already become moot and academic as Angela Fornilda's house had been demolished on 2 June 1986 while Leocadia offered to buy the small area of the land where her house is built and he had relented. In the interim, Respondent Amonoy was appointed as Assistant Provincial Fiscal of Rizal, and subsequently as a Regional Trial Court Judge in Pasay City.

The threshold issue is whether or not the mortgage constituted on the Controverted Parcels in favor of Respondent Amonoy comes within the scope of the prohibition in Article 1491 of the Civil Code. The pertinent portions of the said Articles read: Art. 1491. The following persons cannot acquire by purchase even at a public or judicial or auction, either in person or through the mediation of another: xxx xxx xxx (5) Justices, judges, prosecuting attorneys, ... the property and rights in litigation or levied upon on execution before the court within whose junction or territory they exercise their respective functions; this prohibition includes the act of acquitting by assignment and shall apply to lawyers with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession. (Emphasis supplied) Under the aforequoted provision, a lawyer is prohibited from acquiring either by purchase or assignment the property or rights involved which are the object of the litigation in which they intervene by virtue of their profession ( Padilla Vol. H Civil Law, 1974 Ed., p. 230 citing Hernandez vs. Villanueva, 40 Phil. 773 and Rubias vs. Batiller 51 SCRA 130). The prohibition on purchase is all embracing to include not only sales to private individuals but also public or judicial sales (ibid., p. 221). The rationale advanced for the prohibition is that public policy disallows the transactions in view of the fiduciary relationship involved i.e., the relation of trust and confidence and the peculiar control exercised by these persons (Paras, Civil Code, Vol. V, 1973., p. 70). In the instant case, it is undisputed that the Controverted Parcels were part of the estate of the late Julio M. Catolos subject of intestate estate proceedings, wherein Respondent Amonoy acted as counsel for some of the heirs from 1959 until 1968 by his own admission (Comment, p. 145, Rollo); that these properties were adjudicated to Alfonso Fornilda and Asuncion M. Pasamba in the Project of Partition approved by the Court on 12 January 1965; that on 20 January 1965, or only eight (8) days thereafter, and while he was still intervening in the case as counsel, these properties were mortgaged by petitioners' predecessor-in-interest to Respondent Amonoy to secure payment of the latter's attorney's fees in the amount of P27,600.00; that since the mortgage indebtedness was not paid, Respondent Amonoy instituted an action for judicial foreclosure of mortgage on 21 January 1970; that the mortgage was subsequently ordered foreclosed and auction sale followed where Respondent Amonoy was the sole bidder for P23,600.00; and that being short of the mortgage indebtedness, he applied for and further obtained a deficiency judgment.

Telling, therefore, is the fact that the transaction involved falls squarely within the prohibition against any acquisition by a lawyer of properties belonging to parties they represent which are still in suit. For, while the Project of Partition was approved on 12 January 1965, it was not until 6 August 1969 that the estate was declared closed and terminated (Record on Appeal, Civil Case No. 3103, p. 44). At the time the mortgage was executed, therefore, the relationship of lawyer and client still existed, the very relation of trust and confidence sought to be protected by the prohibition, when a lawyer occupies a vantage position to press upon or dictate terms to an harassed client. What is more, the mortgage was executed only eight (8) days after approval of the Project of Partition thereby evincing a clear intention on Respondent Amonoy's part to protect his own interests and ride roughshod over that of his clients. From the time of the execution of the mortgage in his favor, Respondent Amonoy had already asserted a title adverse to his clients' interests at a time when the relationship of lawyer and client had not yet been severed. The fact that the properties were first mortgaged and only subsequently acquired in an auction sale long after the termination of the intestate proceedings will not remove it from the scope of the prohibition. To rule otherwise would be to countenance indirectly what cannot be done directly. There is no gainsaying that petitioners' predecessor-in-interest, as an heir, could encumber the property adjudicated to him; that the Complaint in the Annulment Case did not contain any specific allegation of fraud or collusion in obtaining the judgment appealed from as opined by the Court of appeals in the Appealed Case; and that the auction sale of the properties to Respondent Amonoy was judicially confirmed and ownership and possession of the Controverted Parcels ultimately transferred to him. Nonetheless, considering that the mortgage contract, entered into in contravention of Article 1491 of the Civil Code, supra, is expressly prohibited by law, the same must be held inexistent and void ab initio (Director of Lands vs. Abagat, 53 Phil. 147). Art. 1409. The following contracts are inexistent and void from the beginning: (1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; xxx xxx xxx (7) Those expressly prohibited or declared void by law. These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived. (Civil Code) Being a void contract, the action or defense for the declaration of its inesistence is imprescriptible (Article 1410, Civil Code). The defect of a void or inexistence contract is permanent. Mere lapse of time cannot give it efficacy. Neither can the right to set up the defense of illegality be waived (Article 1409, Civil Code).

The Controverted Parcels could not have been the object of any mortgage contract in favor of Respondent Amonoy and consequently neither of a foreclosure sale. By analogy, the illegality must be held to extend to whatsover results directly from the illegal source (Article 1422, Civil Code). Such being the case, the Trial Court did not acquire any jurisdiction over the subject matter of the Foreclosure Case and the judgment rendered therein could not have attained any finality and could be attacked at any time. Neither could it have been a bar to the action brought by petitioners for its annulment by reason of res judicata. (Municipality of Antipolo vs. Zapanta, No. L65334, December 26, 1984, 133 SCRA 820). Two of the requisites of the rule of prior judgment as a bar to a subsequent case, namely, (1) a final judgment and (2) that it must have been rendered by a Court having jurisdiction over the subject matter, are conspicuously absent. And since the nullity of the transaction herein involved proceeds from the illegality of the cause or object of the contract, and the act does not constitute a criminal offense, the return to petitioners of the Controverted Parcels is in order. Art. 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed: xxx xxx xxx (2) When only one of the contracting parties is at fault, he cannot recover what he has given by reason of the contract, or ask for the fulfillment of what has been promised him. The other, who is not at fault, may demand the return of what he has given without any obligation to comply with his promise. (Civil Code). WHEREFORE, certiorari is granted; the Order of respondent Trial Court, dated 25 July 1985, granting a Writ of Possession, as well as its Orders, dated 25 April 1986 and 16 May 1986, directing and authorizing respondent Sheriff to demolish the houses of petitioners Angela and Leocadia Fornilda are hereby set aside, and the Temporary Restraining Order heretofore issued, is made permanent. The six (6) parcels of land herein controverted are hereby ordered returned to petitioners unless some of them have been conveyed to innocent third persons. With respect to petitioners' prayer for disbarment by reason of malpractice of Respondent Amonoy embodied in their pleading entitled 'Mahigpit na Musiyung para Papanagutin Kaugnay ng Paglalapastangan' and 'Masasamang Gawain (Mal-Pracrices) and "Paninindigan (Memorandum)" both filed on Sergio I. Amonoy is hereby required, within fifteen (15) days from notice hereof, to submit an Answer thereto. After receipt of the same, a new docket number will be assigned to the case. Costs against respondent, Sergio I. Amonoy. SO ORDERED.